How New York Might Prevent a Subway Fare Increase: They’ll Tax Streamers

Lawmakers are considering a 4% state sales tax on streaming services to avoid increased fares for the NYC MTA.

Quick, what’s the connection between Netflix and the New York City Subway? Aside from “you watch Netflix on your phone while on the way to work,” the right answer is “one might soon be paying for the other.”

Per The Wall Street Journal, New York State lawmakers are considering putting the state sales tax on streaming services — such as Netflix, HBO Max, Hulu, and others — in the state’s new budget. Under a proposed version of the budget submitted by the New York State Assembly, a 4 percent state sales tax would be applied to digital streaming products, which would result in, for example, $.80 charges on Netflix’s $19.99 per month premium subscription.

A Netflix rep told IndieWire that a 4 percent local sales tax already applies to Netflix subscribers in New York. This also wouldn’t be the first state to tax someone’s streaming bill; Florida, North Carolina, Pennsylvania, and Washington are among the two dozen or so states that apply sales taxes on streamers. The reasoning behind the proposed tax is unique, as it’s reportedly being floated in New York state budget discussions as a way to prevent fares from rising on the Metropolitan Transportation Authority’s New York City subway systems.

The Assembly projected that a 4 percent state sales tax to streamers could raise more than $100 million a year. Other ideas to address the MTA deficit could include corporate tax increases, fees on package deliveries, or a surcharge on Ubers and Lyfts (New Yorkers will tell you those car-service fees are already pretty high).

Last year, the MTA projected it would face a $2.5 billion budget deficit by 2025. The organization approved a 2023 budget that assumes the MTA would receive $600 million from other levels of government, and that it would have to increase subway fares from $2.75 to $3, or a 5.5 percent increase. The amount of new subsidy to operate MTA’s subways and buses is expected to rise over $1 billion in 2024.

Governor Kathy Hochul initially planned to prevent fare increases through contributions from New York City’s government and a proposed increase in payroll taxes, which would generate a projected $700 million. However, with state lawmakers expected to reject Hochul’s plan, Democratic members of the state legislature have floated several alternatives.

The current New York State budget expires March 31. According to the state’s constitution, the new budget will need to be approved the next day, on April 1.