New York State governor David Paterson’s proposal to impose a tax on digital downloads has drawn criticism from some in the music industry.
Paterson has proposed a 4% sales tax on downloads of music, ringtones, games, movies and other media from online retailers. State officials say it would raise $15 million in the fiscal year that starts in April, and $20 million each following fiscal year.
A2IM president Rich Bengloff said, “Due to changes in technology, the music industry had already been faced with declining revenues for a prolonged period of time prior to this financial crisis due to consumers shifting to the illegal acquisition of music. The reality is that this tax will probably not be paid by either the consumers buying music online or retailers of the music as the pricing of music can not be increased.”
“Instead this tax will need to be absorbed by those least able to afford it, the music labels that have already experienced long periods of unprofitability,” he continued. “Otherwise any change in prices may very well increase the level of consumer non-paid illegal acquisition of music.”