updated 05:05 pm EDT, Thu March 12, 2009
New York Scuttles iPod Tax
New York Governor David Paterson late yesterday announced that his government would scrub plans to institute a batch of taxes that would likely have raised the costs of digital music in the state. Among taxes that would have affected cable TV, movies and sports, the government is now scrapping plans for an informally-titled "iPod tax" that would have added an extra charge to downloads through iTunes and other online music stores.
The taxes had been part of a plan to make up for an exceptionally large spending deficit for 2009, which is unofficially believed to be as high as $14 billion. New York's proposed taxes would have covered only about $1.3 billion of this shortfall and now aren't considered necessary, as federal bailouts are expected to at least temporarily alleviate the need for a spending overrun.
It's not clear whether Paterson expects to avoid proposing such taxes in the future. The digital tax and others had contributed to a poor public image for the governor and had drawn criticism that it would further discourage the development of online business in New York. The state has previously opted to tax Amazon and other more conventional online retailers for sales where most of the US only applies taxes to sales where the company itself has a location.