A continued shift towards digital media goods such as downloaded music, videos and e-books and away from physical formats could affect $41 million of New York City tax revenue, according to the Independent Budget Office watchdog organization.
In New York State, sales tax revenue from physical media goods totals about $76 million a year and extending the tax to cover their digital equivalents would yield $38 million annually, IBO said in an Oct. 1 policy brief.
"If New York state and city want to consider extending the sales tax to digital goods, they could examine the approaches of many other jurisdictions,"
For example, all digital media goods are subject to sales taxes in the District of Columbia and in more than half of the 45 states with a sales tax.
IBO's report discusses the growth in sales of digital media and the economic rationales for and against including digital goods in the sales tax base. It overviews digital goods taxation in other states, and examines the revenue implications for New York city and state.
A proposal by then-Gov. David Patterson to add digital media goods to the state and local sales tax base was dropped during negotiations over the 2009-10 state budget. The New York State Tax Reform and Fairness Commission's final report to Gov. Andrew Cuomo in November 2013 included taxing digital media goods among its tax overhaul options.
