Filling up your iPod could get very taxing if Gov. Paterson has his way.
The governor wants to begin taxing music and movie downloads as part of an effort to plug the budget gap – a move New Yorkers say will only make piracy more appealing.
“It’s a horrible idea,” said Nel Chude, 27, a model and actor from Brooklyn. “I actually buy music, and I just spent $80 yesterday. The sales tax would add up, and would definitely create more Napster-type situations.”
Downloads were exempt from the state sales tax because, unlike CDs and DVDs, they are not tangible goods. But under the current budget proposal, a 99-cent song on iTunes will now cost $1.07.
Apple already charges sales tax in 18 states, but New York would only be the second – after New Jersey – to require the tax through legislation.
Dubbed an iTax, the fee is paid at the time of download based on the billing addressed of the credit card, officials said.
Industry advocates say the state should be encouraging rather than penalizing digital sales, because by skipping all the plastic and packaging, customers are doing their part to preserve the environment.
“Downloading a song instead of buying a CD is a far greener activity,” said Steve DelBianco, executive director of the trade group NetChoice. “They say they are closing a loophole, but this is a fundamentally different transaction – an entirely new tax.”
The state is already embroiled in a battle with Internet retailers such as Amazon, who claim that they are exempt from the sales tax because they do not have a physical presence here.
Under Paterson’s proposal, any local authors or musicians that link to their work on Amazon would in effect be creating a New York office for the retailer, DelBianco said.
But customers at the Apple Store on Fifth Avenue agreed that the tax will make stealing music through piracy even more attractive than it already is.
“You’ll find that iTunes sales will drop,” said Nicole Stutz, a student at NYU.
“I think it will encourage pirating. Anything that penalizes buying music will cause people to find ways around it. I used to spend a lot of money on iTunes, but I find it’s not necessary anymore,” she said.
Jermaine Fuller, 20, a college student in The Bronx, said he purchases $200 of music online a month on iTunes, but would probably change his behavior under the new proposal.
“This is going to stop people from buying music,” he said. “New Yorkers are not going to be spending as much money – we are in a recession. It’s going to end up hurting the economy.”
The state has not said how much revenue the new tax is expected to bring in.