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Businesses The Almighty Buck Technology

A 'Netflix Tax'? Yes, and It's Already a Thing in Some States (usatoday.com) 135

An anonymous reader shares a report: Your monthly bill for Netflix, Amazon, Hulu and other streaming entertainment services could go up soon as states such as Illinois try to find ways to offset declining sales taxes and other revenue shortfalls. Chicago, Pennsylvania and Florida have already passed a so-called Netflix tax, and cities such as Pasadena, Calif. have broached the issue. These taxes can translate to additional fees of less than $1 each month to consumers. But over the months -- and tacked onto multiple streaming subscriptions -- they might add up to $50 or more each year. Netflix, consumer tax groups and tech trade organizations have voiced their opposition to such taxes, warning they can be unfair and deter innovation. Some opponents have initiated legal challenges, and at least one state has shelved plans after a court decision. But state and local governments aren't likely to halt fresh efforts as falling pay-TV subscriptions and video rentals mean there's less opportunity to tax cable bills or charge sales tax at the cash register.
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A 'Netflix Tax'? Yes, and It's Already a Thing in Some States

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  • by stabiesoft ( 733417 ) on Friday August 18, 2017 @03:03PM (#55043555) Homepage

    Taxes and fees are crazy high on phone (land is really crazy with the subscriber fee). The local city utility loves to tack on weird stuff onto the electric/water/trash/sewer bills. They just figure people will not notice. Netflix is a service almost like telco, so really I'm surprised it took them this long.

    • by goombah99 ( 560566 ) on Friday August 18, 2017 @05:59PM (#55044891)

      This is my favorite Item on my DSL (Century Link) phone bill. What the heck is that. It's not a govt tax. $5 goes to Century link. So why isn't it part of the advertised price. If it's a gov't allowance they must earmark to pay for expansion then why hasn't my DSL service improved in 20 years?

      I also wonder why companies that do sell what they sell at the advertised price (like T-mobile does) don't make a bigger deal of their honesty (at least honesty about the cost) because customer's hate these creeping fees

    • Netflix isn't tied to a location so how can the City know? Couldn't I just tell netflix I live in some state without taxes?

  • by rsilvergun ( 571051 ) on Friday August 18, 2017 @03:07PM (#55043599)
    on the rich. The government still needs money to run. And despite what the rich's media outlets tell you there's no magic 'government waste' to cut that makes the need for taxes go away. So you either start cutting essential services (fixing roads, police, fire dept, etc. Not listing schools, we already cut those) or you come up with taxes like these that target the working class.

    The Working Class are the only ones with any money that don't have multi-billion dollar media empires and lobbying arms sticking up for them. The used to, we called those 'Unions' an shut them down because they got a little corrupt and so instead of fixing them we threw baby out with bathwater.
    • The government still needs money to run. And despite what the rich's media outlets tell you there's no magic 'government waste' to cut that makes the need for taxes go away.

      That is where you are wrong.

      Have a look at an earlier comment I made [slashdot.org] in this discussion.

      Basically, sales tax revenues in Illinois are up 10% over four years. Gas taxes are also up. Granted, income taxes are down. That said, gas taxes go for roads and transportation, so they actually have more funding for that now that tax revenues have gone up. I am sure that income tax revenues being down have some impact, but all those specific taxes being up should mean that those specific things for which the taxes

      • You are fooling yourself if you think taxes collected go to the thing they are "earmarked" for. People have died because the tax on phone lines that was supposed to go to 911 installations was instead used for police benefits like dry cleaning and other garbage (NYC). Once the government has the money, it's reallocated and slush-funded all over the place, NOT where it should be at all. How much money from state lotteries has gone to the schools it was intended for? Precious little I'm afraid.

        • How much money from state lotteries has gone to the schools it was intended for? Precious little I'm afraid.

          Hence my comment about there being a serious problem with fiscal policy. You were more direct than I was.

          I remember when Florida instituted its state lottery. There were big promises of more funding for education. What actually happened was that the state legislature basically reduced the general fund budgetary obligation for education funding by whatever amount the state lottery kicked in. In that way, the state lottery became the exact same sort of slush fund you describe, while still technically conf

        • by sims 2 ( 994794 )

          Well the deal with the lotteries was they figured out how much they expected the lotteries would bring in and took that much out of their allocated funding then when the lotto didn't bring in as much as expected the schools ended up with even less.

          Reminds me of the amazon tax that just went into effect here recently the state said it wasn't going to help their budget as they had already allocated the money they thought they would get from amazon in the budget before it passed.

          It's a nice shell game they cla

        • You are fooling yourself if you think taxes collected go to the thing they are "earmarked" for. People have died because the tax on phone lines that was supposed to go to 911 installations was instead used for police benefits like dry cleaning and other garbage (NYC). Once the government has the money, it's reallocated and slush-funded all over the place, NOT where it should be at all.

          It's a two-step process. First, because expense X is receiving money from a dedicated tax/fee, the legislature diverts money that had been coming out of the general fund for that expense, because it's being paid for by the special tax. Never mind that the special tax was needed because the share of the general fund that it had been getting wasn't enough for the expenditures that needed to be made -- now there's the special tax, and if it's not enough, the legislature can just point at the taxpayers and decl

    • Or, alternatively, this is what happens when you destroy the job market like Obama did for the last 8 years with massive new regulation and Obamacare while simultaneously trying to buy votes by eliminating the work requirement for welfare recipients and massively expanding entitlement programs... The rich already pay 80% of all tax in the US http://www.newsmax.com/Finance... [newsmax.com] while the "poor" 45% Democrat voting block who thinks the rich don't pay enough pay ZERO taxes but enjoy all the general benefits as

      • by Gravis Zero ( 934156 ) on Friday August 18, 2017 @05:44PM (#55044761)

        Or, alternatively, this is what happens when you destroy the job market...

        A) If environmental regulation is slowly becoming onerous then it's a sign you are doing something very wrong and should change. Frankly, companies that pollute the environment should be 100% financially responsible for cleaning it up.
        B) The renewable energy market has created 10x the number of jobs that it's "destroyed".
        C) Coal jobs are being lost natural gas, nothing else.

        The rich already pay 80% of all tax in the US

        $100K/yr isn't what it used to be, so not a qualifier for being "rich". How much are the people that make $1M/yr paying? Also, instead of just the income tax, let's include ALL taxes. For some reason taxation is highly regressive which means the people with the least end up paying the largest percentage. Let's turn that around.

        while the "poor" 45% Democrat voting block who thinks the rich don't pay enough pay ZERO taxes

        The poor pay zero taxes because their pay hasn't increased for the last 40 years while the value of their income has decreased for the last 40 years which has caused them to fall below the poverty line. Yes, for some reason, you can have a full time job and still be impoverished because assholes aren't paying you what you are really worth.

        but enjoy all the general benefits as well as free healthcare, free housing, free food, free phones...

        Literally none of those things are free. I would also point out that Republicans voters are the ones who benefit the most from the ACA which is why despite having majority control of The Senate, The House and the presidency, Republican politicians were incapable and unwilling to reduce the coverage by the ACA.

        That said, the federal government as well as most states mentioned don't have an income problem, they have a spending problem.

        Yeah, who needs the police, firefighters, hospitals, schools or any of that shit, right? How about we cut subsides to all energy companies and farmers? Then lets go further and tax companies/farmers the exact amount of money that it costs to clean up their pollution. The free market would absolutely eviscerate the market of polluters as it exists today and solar would be the preferred energy source and beef would be 25x the cost of chicken.

        I'm all for the free market as long as they are taxed based on the amount of damage they do to the planet.

        • One of the most remarkable features is the way that agriculture has remained the recipient of vast government expenditure over the years. In the US this has been achieved by farm state congress creatures allying with inner city representatives to vote for each others' subsidies. In Europe the EU started as a way of getting Germany to pay the French peasantry a living wage.

          The way to spot the impact of farm subsidy is to consider the market value of farm land. To the degree that it has a substantial value, t

        • by doug141 ( 863552 )

          Frankly, companies that pollute the environment should be 100% financially responsible for cleaning it up.

          They are quite adept at having the responsibility stop at a shell company holding no money. Bankruptcy law gets in they way after that.

        • You need some citations that contain actual statistics for your "facts". The green jobs lie was just that, a lie. Coal jobs were lost because Obama essentially banned coal fired power plants via regulations making them cost negative to operate. Not even gassfied coal plants could operate at a profit.

          No one is complaining about clean air and clean water, but when you start treating a key atmospheric component that is essentially plant food (CO2) as a pollutant without real science (screaming and stomping y

          • You need some citations that contain actual statistics for your "facts". The green jobs lie was just that, a lie. Coal jobs were lost because Obama essentially banned coal fired power plants via regulations making them cost negative to operate. Not even gassfied coal plants could operate at a profit.

            Well let's see, the price of natural gas plummetted in 2008 [eia.gov] which is a direct result of Bush's 2005 energy policy [wikipedia.org] which exempted natural gas from just about all regulation. However, feel free to point out which executive order he made [archives.gov] to make this happen before he came into office.

            CO2 is produced by every living organism, and plants need it to live.

            Interesting fact, plants absorb and expel it. Until recently, animal life has been living in the margins of what could be absorbed.

            It has historically been at higher levels pre industrial revolution, http://drtimball.com/2012/pre- [drtimball.com]... [drtimball.com] it already blocks all the IR bands at 100%, and adding more will not change that (don't try to feed me that speculative BS about upper vs lower atmospheric diffraction, that is pure speculative BS with zero science to back it up), but somehow we are teetering on the apocalypse, never mind the science and historical evidence.

            Adding more will make it more difficult to extract CO2 from the atmosphere which is something that

            • The low cost of natural gas didn't help coal, but that was hardly the root cause for it's demise. https://longviewpower.com/news... [longviewpower.com]

              I am not even going to get into discussing CO2 with you. You clearly know the AGW arguments but have no background in hard science and thus no filter to determine valid science vs. pull it out their ass speculation/junk science. You are worried that we are turning into Venus huh? You do know that Venus receives more intense solar radiation than earth, plus Venus atmosphere i

              • The low cost of natural gas didn't help coal, but that was hardly the root cause for it's demise.

                No, the root causes are that it's inefficient, becoming increasingly automated and displaced by other energy sources. Obama didn't do this [gregor.us] but he did help this. [forbes.com]

                You are worried that we are turning into Venus huh? You do know that Venus receives more intense solar radiation than earth, plus Venus atmosphere is 97% plus CO2 (970,000 PPM), whereas on earth we are at 400PPM (or 0.04%).

                I guess you don't know about feedback loops, eh? The Venus state is just the end result of the totality of many feedback loops.

                No, plants and animals both respriate and produce CO2

                Riiight. Let's put you in a room full of CO2 to test that theory.

                Regarding the ACA, if the Democrats wanted to make health care better, they should have gotten involved instead of sitting on their hands and trying to obstruct.

                LOL! Right... so how does that work when all the work is being done in secret at Republican luncheons that Democrats were prohibited from attending? Also,

      • Nobody pays zero taxes. There's plenty of people who pay no income tax (many of those having large incomes, like our current president) but there is still property tax, sales tax, road tax, phone tax, Netflix tax...
        • Pretty sure there are records of Trump paying millions in taxes. You need to cite something with actual facts before you try to pull that BS.

          People on welfare and below the poverty line can have a net effective income in benefits of up to $45,000/year and pay zero taxes:

          No income tax: Welfare and income below ~$40k(?) is not taxed, nor do they have to pay SSI/SDI
          No property tax: Those who receive subsidized government housing pay no property tax
          No Sales tax: Those on food stamps don't pay sales tax on food

      • > destroy the job market like Obama did

        Yeah. That darn Obama and his sub-5% unemployment rate. Damn him for the job market that has recruiters messaging me daily based on a LinkedIn profile I haven't updated since I changed jobs 9 months ago. That's sooo annoying, you know? And it's just bloody AWFUL that said job change was the fastest and easiest in my life. I was really looking forward to a few months of dealing with recruiters and interviewers. And that $7500 referral bonus I picked up from brin

        • Check either the labor participation rate or the U-6 number. At this point in time you just look foolish trying to say Obama had 5% unemployment. That the media were his accomplices in lying about the unemployment rate is no excuse after 8 years... If unemployment were really that low, wages would not have dropped by something like $4500 per year on average during Obama's tenure. A tight labor market causes wages to go up, not down.

    • Honestly, given the fiscal disarray some states like Illinois are in, even taxing the rich isn't going to magically fix the financial problems. Taxes are going to have to be raised for everyone, and especially as some traditional taxes like cable (cord cutters) or fuel (increase in electric vehicles, fuel efficient cars) begin dropping off, states need to find new sources of revenue. If states want to do this properly though, they should just raise taxes on ISP's both fixed and wireless. Tacking a tax on
      • states need to find new sources of revenue.

        Wrong, states merely need to tax the people that are doing the damage. For example, large trucks do 10000x the damage to the road as a normal car so why don't we tax them based on how much damage they do? Whenever a company releases pollution into the environment, they should be charged the amount that it costs to clean that up. This would upend the power structure of lots of states which is why they don't want to do that because then where will they get their campaign funding from?

        What we need to do is

    • by schwit1 ( 797399 )
      Past Illinois politicians agreed to provide city workers with platinum pensions in return for union support. Now those periodic pension payments are eating up a significant percentage of the revenue.

      -
      Connecticut ran into the same problem and tried to tax its way out of it. It had the opposite effect because some big corporations(GE and Aetna) and wealthy residents moved to better managed states, which caused a reduction in revenue. Now Hartford is teetering on bankruptcy.

      The bottom line is you can't tax

    • by guruevi ( 827432 )

      You young'in', go back to history class before you spout such non-sense.

      There is MASSIVE waste in government, we used to be able to go to the moon on the equivalent value (adjusted for inflation) of the current NASA budget and today even though the cost of rockets and engineering has gone down significantly, they can barely keep the lights on for a few weather satellites and a portion of the n-th iteration of a space station (the US used to have their own).

      The US and many governments around the world used t

  • taxes do not deter innovation, just like patents do not encourage innovation.

    Yes, Netflix, a service, should be taxed as any other service in the states it serves were these types of services would be taxes anyway. If I rented a movie from Blockbuster in Washington, I paid tax back in the day. Why shouldn't I be paying tax on steaming Netflix today? If I had Comcast, I'd be paying taxes there and I pay taxes for my internet connection.

    • Because you're already taxed for the ISP connection, and data is data.
      • by Anonymous Coward

        I'm already taxed for the infrastructure to get me to BlockBuster. Does that mean the product shouldn't be taxed?

        Netflix is providing a service, it should be taxed in the states that have a sales tax. End of story. I'll pay this in Washington state without complaint. In Oregon, fuck no, this should never be taxed since they don't have a sales tax.

        The tax on the ISP connection is pennies compared to the money I spend on other services over the internet. Should the ISP taxes be jacked up astronomically?

    • Except that there has to be a legal basis for claiming to have taxing authority. If memory serves, the US Constitution directly forbids states from levying taxes on goods that simply pass through the state. I think a very good case can be made for a claim that packets of digital data are no different from a transportation and legal standpoint than cases of lettuce.

      It is also well settled law that a state (or any other government agency) cannot claim jurisdiction over something that happened outside of its p

    • by sims 2 ( 994794 )

      Really? None of that in oklahoma yet. The ADSL2+ line is $45.00/mo

      Actual bill after taxes/fees $45.00/mo

      Maybe someday they will talk the isp's into selling connections actually worth taxing (hahahaha thats funny).

      IIUC the reason it currently isn't taxed is an attempt to get them to actually deploy effing broadband.

    • You paid sales tax or a blockbuster tax?

      Maybe there should be a pistachio almond icecream tax?

      Or a left handed tax?

      Or a couldn't make it to see the eclipse, but I need the government's filthy fingers in my back pocket tax?

      Where do you draw the line?
  • by evolutionary ( 933064 ) on Friday August 18, 2017 @03:18PM (#55043691)
    Okay, this is getting word and legally questionable. Sales tax, is exactly that. You can tax non-essential services/goods. If the shift is from one industry to another for the same service type, it is taxed the same way. Move from local video store to online streaming makes not difference unless implemented badly: you are taxed for the service regardless of how it's provided. If you add fees to specific services, that is basically a luxury or sin tax which is traditionally used to dissuade people from using that product or service. Examples like tobacco, alcohol or the like. Problem is if you add what is basically a sin tax on streaming, that is a penalty on the entire industry. And a sin tax on streaming is a pandora's box. To make it fair or impartial you'd have to apply the same to movie theatres, theatre, or anything that delivers an entertainment service. It's high questionable which is why one court threw it out already. These states need to either raise taxes in general (which they don't do because it would cost some officials their elected positions) or find a justifiable sin tax on some industry that you can prove does public harm. Otherwise, it's just a way to try to hide an additional tax so official can say they haven't raised taxes in general. It would be curious to know why these states focus on video distribution services. As far as justifying an official sin tax on the industry, that unlike tobacco or alcohol, will take more studies/proof to justify. Better off taxing marajuana. You can easily put a sin tax on that which is ethically/legally/politically acceptable, and you'd get tons of revenue anyway. We are about to do that in Canada, and we aren't falling apart. (We've been using tons of weed for years with the police mostly turning a blind eye and we're doing okay so far, the new laws next year will get a ton in taxes).
    • Courts tend to reject these laws when the state is trying to claim jurisdiction over entities that are not physically present in the state. IOW, a state can tax the streaming of movies and they can tax streaming a movie differently than they tax a movie theater because, while the content may be the same, the service is different. What they cannot do the streaming of movies over Netflix at a different rate than streaming Amazon Prime. Another thing that they cannot do is require the streaming company to coll

    • The other way to do it would be to close loopholes that let multi-billion dollar corporations pay less tax than I do. We, the people, via taxes, effectively subsidize the entities that are trying their damnedest to fuck us over as much as possible as long as it's profitable.

      What I'd like to see is a study on how well a corporation like Google would fair if it was headquartered in Somalia. And then take that data and figure out what percentage of their profit is due to the infrastructure that the taxpayers

  • Government and their tax schemes are kind of like parasites; only instead of trying to exploit a biological niche, they find any economic activity they can -- and try to extract something from it.

    Income tax, fine
    Property tax, fine
    Sales tax fine (though it's good to live in Oregon sometimes!)
    Auto Registration .... (it's a tax, no matter how you slice it) .... the list goes on pretty much endlessly.

    Only slightly surprised IRS goons don't show up and shut down lemonade stands because johnny jr didn't up.

    Taxes

    • Income from a lemonade stand is already taxable. Check www.irs.gov.

      Also, you are required to get a city permit (let's just call that a flat tax) in many places: http://www.nydailynews.com/lif... [nydailynews.com]

      Taxes are literally everywhere. It's just the amount and to whom that changes.

      • Reading that made me throw up a little in my mouth.

      • by sims 2 ( 994794 )

        Fun! For a lemonade stand here you would need a "Transient Merchant and/or Itinerant Vendor License" which is $600/yr

        It is only available by the year.

        Hope you are planning on selling a lot of lemonade.

  • But Netflix should pay/charge all taxes such as GST, PST/HST in Canada just like cable companies, groceries stores and every body else.

    • Why should Netflix pay a tax like your cable company. The cable company is collecting taxes from you and remitting them to your government because it has a physical presence and the service they are offering is the transportation of digital data packets. Likewise with your grocery store for food or your car mechanic for car repairs. If they were to tax Netflix and Amazon for the content they send to you (more correctly, tax you and require Netflix and Amazon to collect it from you and remit it on your behal

      • because it has a physical presence

        Having a physical presence for the purposes of charging a sales tax is an artificial legal distinction. The sales tax is not paid by the corporation, it is paid by you, and YOU have a physical presence. The sales tax goes to provide services to YOU.

        The "physical presence" makes a great deal of sense when it comes to income and corporate taxes, but not so much sales taxes.

        If they were to tax Netflix and Amazon for the content they send to you

        They aren't taxing Netflix for the content they send you, they would be taxing you on the sale of the service. It's easy to identify the

        • The physical presence thing makes a great deal of sense when deciding legal jurisdiction. Should states like Texas and Florida get to hold people accountable for murders committed in California and Illinois? The former states have harsher punishments than the latter states so why do we let a little thing like physical location get in the way of justice?

          Likewise, if I mail something to a customer in California from my home in Wisconsin, under what legal theory does California get to claim the jurisdiction ne

      • Because it's a tax loophole that should be closed, because it isn't fair. The tax code was created long before the Internet. Back then, it was not possible to "sell" a product or service from abroad without passing through customs.
        How can a local company compete against Netflix if it has to collect 15% tax when Netflix doesn't?

        Also, it gives 0 incensitive to Netflix to open a physical presence in Canada, since the second they do that, they'd have to collect taxes. Unless they use another loophole through a

        • Well, Canada has the option of completely regulating all internet traffic entering Canada, don't they. They have complete authority to require that all traffic be decrypted and inspected before being passed to the end user just as they do with physical goods. What they do not have is any authority to compel a corporation not located within their physical boundaries to collect taxes on their behalf and remit them. It is not a "loophole" that needs closing anymore than the "loophole" that prevents the United

          • It doesn't have to be Netflix that collect the taxes. It could also be the credit card companies. It's still a loophole if Netflix can compete against a Canadian company by offering the same product cheaper only because one has to charge taxes and the other one doesn't.

            then we must also allow the states of Utah and Wyoming to issue arrest warrants for the owners of marijuana resellers in Colorado

            No, we must not. You are making a straw man. Marijuana resellers in Colorado are not selling anything in Utah and Wyoming. Netflix is selling stuff in Canada.

            than the "loophole" that prevents the United States from requiring Canadian residents who are not US citizens from paying US income taxes

            Another straw man argument. Canadians working permanently in the states must pay tax

  • by El Cubano ( 631386 ) on Friday August 18, 2017 @03:19PM (#55043697)

    Your monthly bill for Netflix, Amazon, Hulu and other streaming entertainment services could go up soon as states such as Illinois try to find ways to offset declining sales taxes and other revenue shortfalls.

    Illinois sales tax revenues (2016 is the last table available) [state.il.us] are actually rising:

    Total Sales Taxes

    FY2013 | FY2014 | FY2015 | FY2016
    $ 10,151,497,166 | $ 10,547,896,792 | $ 11,013,086,296 | $
    11,184,156,224

    In fact, sales tax revenues are up around 10% over 4 years. If you look at the table, excise taxes are flat and gas taxes are up. Income, gaming, and other taxes are down. Income tax being down is a no brainer with the economy how it is.

    If sales tax revenues go up 10% over 4 years (in a state with one of the highest sales tax rates in the nation) and they are looking for more ways to tax, then there is a serious problem with fiscal policy. Even if you factor in the decline in income, gaming, and other taxes the total decline is 10%. If a 10% decline over fours years wreaks that much havoc, then, well, there is a serious problem with fiscal policy.

    • Well yes, there is a major problem with fiscal policy (and corruption) in Illinois. Lots of which come from lifetime pension deals for the government employees (sometimes multiple lifetime pension deals to the same individual, even if they only worked a single day!).

      • Before you blame the employees for this problem, consider the State Of Oregon which faces a huge deficit because of this (and cities and counties since they are part of the system). But it wasn't the employee unions that created the problem. The state came to the union many years ago and said "we can't give you a raise, but would you accept a good pension plan for when you retire?" In lieu of better pay during a time of inflation, the employees settled for more later. The state then, in its infinite wisdom,
        • so the money the state didn't have for raises was supposed to be "put away" for pensions...the opposite of the private sector practice of buyouts. It was scam on taxpayers from the beginning, union members should get nothing at all and count themselves lucky they aren't spending retirement in prison
  • In Texas I've been charged our normal sales tax on my Netflix subscription for ages (I'd say years but I don't recall exactly when it kicked in). It isn't any different from any other product or service.
  • We should all just go back to pirating our media? Because I got NO MORE taxes for you GREEDY a-holes... I'm Spent.
  • Officials in government must get messages directly from God to tax things. It is like a command. If it exists we must tax it ! It is a serious message in disguise. It is an admission that our government can no longer afford to govern. That is just about what goes on in the average American family. Families can no longer afford to exist unless there is some cheating on the basics. Hidden income is one path. But even more than that people are doing without things that they actually need in order to surv
  • Give it a few years and if you download any movie from another provider (legal or otherwise) you'll be charged with tax evasion.
  • by Bruce66423 ( 1678196 ) on Saturday August 19, 2017 @02:22AM (#55046725)

    The Value Added Tax system in the EU means that ALL items - except a small list of essentials set by individual countries, e,g, food and books in the UK, are taxed at about 20%. So that will be hitting all new services from very early in development. We can debate whether this is a good thing or not - but it does avoid the silly levels of complexity that the variable rates found in the US produce.

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