Friendly Fire in Vermont Tax Debate

Growing up in Harare, Zimbabwe and then Dallas, Texas – I was always struck by the lack of availability of authentically African stories. That’s a big reason I founded AfroLandTV, which brings valuable and often overlooked stories from the African diaspora to US audiences. AfroLand is built on an empowerment model that strives to give African writers, directors, and performers a platform to tell their own stories and share them with the world. And we operate on a free/ad supported business model so everyone can find and appreciate this pathbreaking and culturally vital work.

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But Vermont’s new 5% gross receipts tax on streaming services puts my service and others like it at risk, threatening the economic viability of small and independent streaming services that provide diverse, high-quality programming and serve underrepresented audiences and communities.

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The proposed new streaming tax is being sold to legislators as a way to boost “public, educational, and governmental” programming. But in a cruel twist, it taxes my programming to subsidize theirs – setting back the vital goal of affordable access to quality, diverse stories from historically marginalized communities – standing on its head what the legislation purports to achieve.

 

This makes no sense – and we urge legislators in Montpelier to look at the facts and reject this costly and counterproductive idea.

 

AfroLandTV is a member of the Streaming Innovation Alliance that has opposed the proposed Vermont streaming tax. And while press coverage typically focuses on big SIA members like Netflix and Disney+, the impact of these new streaming taxes will fall most heavily on smaller, independent services like mine and other SIA members such as America Nu and For Us By Us networks. Our services and other like them offer high quality, enriching information and storytelling that traditional “PEG” channels seek to deliver – but are reaching vastly bigger audiences than PEG achieves today.

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Vermont’s proposed new 5% tax on our gross receipts would be a huge burden to networks like ours – sucking vital resources out of our programming budgets, meaning we’ll have less resources to license and create stories from traditionally marginalized communities.

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Even the biggest, most commercial streamers face an intensely competitive environment today and many have failed to turn a profit for years. Consumers benefit mightily from low “switching costs” meaning it is easy to drop services when prices rise, or the flow of quality new programs dries up. For services like mine that means waking up every day needing to prove yourself and deliver new value all over again. Vermont’s proposed 5% gross receipts would radically undermine our ability to do so.

 

Consumers lose alongside us. As SIA has explained, the proposal would amount to a deeply regressive tax hike, falling most painfully on lower income families who are over-represented on streaming rolls since they are least able to afford costly traditional pay TV packages.

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For non-ad supported service, Vermont’s new tax would mean higher subscription prices for consumers almost overnight. A recent article analyzing the S.181 proposal reviewed local streaming fees imposed by other communities and found “reason to believe that streamers aren’t bluffing when they say a new tax would force them to raise prices for consumers” – which is obviously true. Large national subscription streaming services advertise consistent pricing across the country. Why would they confuse that value proposition in an intensely competitive market – particularly as the tax’s fiscal impact would vary widely year-to-year based on changing advertising and other revenue?

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Vermont’s lawmakers are right to care about the availability of affordable quality entertainment, culture, and educational programming for its residents. But the proposed new 5% streaming gross receipts tax wouldn’t serve that goal – it would set it back by decimating free and low-cost streaming options meeting these very needs today.

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There are many ways to fund Vermont’s existing PEG channels without depriving Vermonters of affordable diverse and independent streaming options, whether through direct appropriations from existing funds or by raising taxes in an evenhanded, broad-based way that fall fairly across the entire economy, and aren’t heaped entirely on a small handful of streaming businesses.

 

But the current streaming tax proposal ignores these options and instead would be a huge step back for the very goal of quality, high value programming it seeks to advance. We urge the Vermont House to reject S.181.

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Michael Maponga is Founder and CEO of AfroLandTV.