The Urethane Blog

Future Taxes Here Now

Chicago PlayStation Users Furious They Must Now Pay A 9% “Amusement Tax”


When they powered up their Playstations on Nov. 9, Gamers in the Windy City were furious to learn that they will now need to fork over a 9% levy to the city every time they pay for any of a suit of online services as Chicago steps up enforcement of its supremely unpopular Amusement Tax, which was expanded in 2015 to cover video games, streaming services and other digital-entertainment mediums. While some companies have resisted what they have decried as an overreach by city tax collectors, who are desperately trying to plug a massive budget hole while supporting some of the most under-funded public pensions in the country, Sony has become the latest video gaming company to acquiesce to the city’s demands. Meanwhile, Nintendo and Microsoft (which owns Xbox) have been collecting the levies since 2015.

According to the Chicago Tribune, the city’s amusement tax once only applied to concerts and sporting event tickets, but several streaming companies like Netflix and Hulu have bowed to the city’s demands since the levy was first expanded. Apple, on the other hand, filed a lawsuit against the city back in August alleging that the tax on its streaming service was “illegal and discriminatory”. The company isn’t paying the tax while the case works its way through a Cook County court.

Previously, a group of streaming companies including Netflix, Amazon Prime, Spotify, XBox Live and Hulu sued Chicago back in 2015 alleging that the tax was in violation of federal law. However, the judge ruled in the city’s favor in May. After an appeal, the case is awaiting a ruling from an appellate court.

Bill McCaffrey, a spokesman for the city’s Law Department, told the Tribune that the city “uniformly enforces the amusement tax,” and neglected to address the outcry.

“If a business is not collecting the tax where we believe it applies, the city takes the necessary steps and works with the company to ensure compliance with the law,” he said.

The tax will now apply PlayStation subscription services, like PlayStation Now, PlayStation Plus, and PlayStation Music. Regular game purchases from the PlayStation store are untouched by the tax.

As the city grows increasingly desperate, there’s still room for the problem to get worse. As ratings agencies have demonstrated, the city’s pension funding projections consistently err on the unrealistically optimistic. According to a Moody’s report, the true magnitude of the unfunded liabilities facing the city is closer to $130 billion.

What other reason could there be for discouraging one of the safest forms of entertainment in a city where the murder rate is spiking?