The Idaho House of Representatives voted Monday to repeal a $1.5 million tax hike on digital streaming services offered by companies like Netflix and Hulu, among others.
All House Democrats, plus GOP Reps. Kathy Sims of Coeur d’Alene, Marc Gibbs of Grace, Kelley Packer of McCammon and Maxine Bell of Jerome, voted against the tax cut.
The bill’s sponsor, House Majority Leader Mike Moyle, a Republican from Star, said the bill cleans up some unintended consequences caused by ambiguous wording in legislation he sponsored in 2014.
That bill, which found its way into law, left unclear if the state should tax Idahoans who purchase services from companies like Netflix, Hulu, Spotify, Pandora and numerous others. Lacking legislative guidance, the Idaho State Tax Commission, overseer of tax collection and some policy, unilaterally decided to raise taxes on residents.
That increase, Moyle’s bill suggests, amounted to about $1.5 million.
The legislation would classify streaming subscriptions as services, and not tangible property. That’s important because Idaho doesn’t typically tax services.
Movies purchased and downloaded to personal devices, though, will still be taxed.
Democratic Rep. Mat Erpelding of Boise again opposed the bill, telling colleagues the definition of tangible property is outdated.
“I don’t think it’s good for our future,” Erpelding said, expressing worry Moyle’s bill could lead to tax reductions on other intellectual products, which would result in steep revenue drops.
“When it comes to our budgets, this is going to be an increasingly bigger problem,” the Democrat warned.
Erpelding first opposed Moyle's bill in the House Revenue and Taxation Committee.
Rep. Ilana Rubel, D-Boise, said the bill would give an unfair advantage to some companies.
“This seems very much like a bill that picks winners and losers,” she said. “I think that is the exact wrong direction we want to be going in.”
Moyle closed debate, reminding lawmakers the state didn’t tax Netflix and other subscription services before passing his 2014 bill, and that the Legislature will always have to return to make code adjustments as technology evolves.
The bill now heads to the Senate. The Senate Local Government and Taxation Committee, which will likely receive the assignment to hear the measure, put a hold on the tax commission’s administrative rules that would have approved the Netflix tax hike in the first place.
Two of the panel’s senators, Republican Cliff Bayer of Boise and Democrat Grant Burgoyne, also of Boise, told IdahoReporter.com earlier this year they’d like to kill the Netflix tax hike, too.
Sen. Jim Rice, R-Caldwell, isn’t high on keeping the increase, either.