City authorities have long discussed the tax, and are not the first to implement it. Chicago introduced 9-percent tax, known as the "cloud tax," extending the amusement tax to online services, including Netflix, Amazon, Spotify, and others. This tax is not to be confused with taxes on cloud-computing services, or "nonpossesory computer leases."
The Pasadena version, dubbed the "Netflix tax," will be slightly higher, estimated at 9.4 percent, and is seen as a logical development of a 2008 Pasadena tax amendment that puts fees on cell phones on equal terms with landline phones. Forty cities in California are reported to have similar laws.
"People are going to wake up and see tax line items on their Netflix and Hulu bill and they are not going to be happy," said Internet Association director Robert Callahan.
According to Pasadena City councilman Tyron Hampton, should the city impose the controversial tax, it may also find itself a defendant in a similar case.