- Associated Press - Friday, May 1, 2015

MONTGOMERY, Ala. (AP) - Alabama legislative leaders are asking the state’s revenue department to hold off on a plan to begin taxing digital streaming services.

Lawmakers in April sent a letter to revenue commissioner Julie Magee asking her department to withdraw a proposal to impose a 4 percent rental tax on video and audio services such as Netflix and Pandora.

A copy of the letter obtained by The Associated Press said new taxes should be approved by the legislature.

The letter was signed by several members of the Alabama Legislature including Speaker of the House Mike Hubbard, R-Auburn, and Senate President Pro Tem Del Marsh, R-Anniston.

“We have received concerns from several members of the legislature and other interested parties that the amendments may be overly expansive and may also be considered a new tax, in which case the Alabama Legislature would be the proper governmental body from which to make a determination or enactment,” the letter said.

The revenue department, which declined to comment on the letter, has previously defended the measure. Officials say the tax isn’t new but a mere clarification needed for an out-of-date code created before the digital era.

Companies affected would be allowed to pass on the cost to customers.

The revenue department has estimated Alabama could lose between $5 million and $10 million in taxes previously received from now-defunct video rental stores.

At a hearing in April, attorneys and representatives from companies across Alabama and the U.S. objected to the tax. Some said the scope of the tax would be too broad. Others expressed concerns with privacy infringements that could come from companies tracking use.

If approved, the proposed tax could go into effect Oct. 1.

Rep. Victor Gaston, R-Mobile, also signed the letter. In an interview, Gaston said the plan to tax digital streaming goes beyond the duties of the department.

“This is an increased tax,” he said. “This would be a tax on those who have provided the service, and I think the Legislature is charged with that responsibility. An elected body should have that responsibility.”

Asked whether he thinks the legislature will consider the measure, Gaston said there has been some discussion but said he doesn’t expect any bills will be introduced in the 2015 legislative session.

A spokeswoman for Hubbard declined to comment.

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