Chicago Collects $2 million 'Netflix Tax' to Bolster City Coffers, Other Cities and States Could Follow

The city of Chicago has become a pioneer in collecting tax revenue from digital entertainment like streaming videos and gaming.

The "Netflix tax," as it is called, is a 9 percent sales levy on streaming entertainment that has already brought in $2 million to the city.

Chicago is believed to be the first major city in the country to collect taxes from online streaming services, and the Windy City may have paved the way for other cities and states to follow its lead.

The U.S. Supreme Court last summer cleared a path for states to collect sales tax from online shoppers, ending a decades-old law that affected online sales. The court said in the South Dakota vs. Wayfair case that "the internet's prevalence and power have changed the dynamics of the national economy," according to a CBS News report.

Pennsylvania is set to start collecting a similar tax to Chicago's this summer, and the governor of Rhode Island has penciled the same kind of tax into his state's budget this year.

Mark Mazur of the Urban-Brookings Tax Policy Center said the experimental phase of implementing the tax should gain momentum as more shoppers buy more products and services online and less from brick-and-mortar stores. It's basically a way of shifting the revenue stream for states and municipalities as shoppers' habits change.

"Cities and states are beginning to experiment with this," Mazur told CBS News. "People are buying more and more services and less goods, so the sales tax pace is getting reduced, and you end up trying to find ways to raise revenue from services."

Mazur added that as sales taxes on services could increase, more companies would most likely raise the prices of their services, which trickle down to the consumer.

Of the $2 million collected so far by Chicago, $1.2 million of it was from Sony. Money from Sony came from PlayStation Video live events and also purchases of online videos and music, according to Bloomberg. Online ticketing services Eventbrite and Fandango paid almost $800,000 and $70,000, respectively.

Chicago could rake in about $12 million a year, based upon estimates when they passed the levy in 2015.