The State of New York is looking into introducing some fun new taxes for online entertainment.
Gov. David Paterson unveils dire New York State budget that includes new taxes, layoffs and cuts
Trying to close a $15.4 billion budget gap, Paterson called for 88 new fees and a host of other taxes, including an "iPod tax" that taxes the sale of downloaded music and other "digitally delivered entertainment services."
"We're going to have to take some extreme measures," Paterson said Tuesday after unveiling the slash-and-burn budget.
The proposal, which needs legislative approval, did not include broad-based income tax increases, but relied on smaller ones to raise $4.1 billion from cash-strapped New Yorkers.
Movie tickets, taxi rides, soda, beer, wine, cigars and massages would be taxed under Paterson's proposal. It also extends sales taxes to cable and satellite TV services and removes the tax exemption for clothes costing less than $110.
"The governor is nickel-and-diming working class families," said Ron Deutsch, executive director of New Yorkers for Fiscal Fairness, an advocacy group.
State Conservative Party Chairman Michael Long warned that reinstating the sales tax on clothing and shoes will drive people to New Jersey, where they will also gas up their cars and pick up their wine, spirits and soda because the prices are less due to lower taxes. "You're sending notice to the people of New York that we really don't want you here," Long said. "The governor proposed flat spending, but why not actually cut the budget before raising taxes and fees?"
Paterson's 2009-10 budget proposal represents only a 1% increase in total spending from this year's budget - the smallest increase in a dozen years. It also calls for:
- A 3.3%, or $698 million, reduction in school aid.
- $3.5 billion in health care savings, including reductions in payments to hospitals and nursing homes.
- Video slot machines at Belmont Park, more multistate lottery games and expanded hours for the state's Quick Draw lottery game.
- Layoffs for 521 state workers and the elimination of seven state agencies.
"This is where we are," Paterson told reporters. "Maybe we should have thought about this when we were depending on what we thought was inexhaustive collections of taxes from Wall Street - and now those taxes have fallen off a cliff."
Paterson aides say the budget represents a net gain for New York City, but Mayor Bloomberg wasn't buying it. He said it could cost the city more than $1 billion, including a $600 million reduction in school aid.
"I don't know that 100% of it is going to go the classroom, but a large percentage of any reduction we get from the state will go to the classroom," Bloomberg said. "That will mean larger class sizes and fewer services."
Education and health care advocates also blasted Paterson's budget and urged state lawmakers to increase income taxes on wealthy New Yorkers to offset the cuts.
"We will be fighting this tooth and nail. We think it is irresponsible to make this level of cuts and not ask the wealthiest New Yorkers to help ease the pain," saidBilly Easton, executive director of the Alliance for Quality Education.
Assembly Speaker Sheldon Silver, who supports a so-called millionaire tax, has said he'd "rather have a broad-based tax than nickel-and-dime" people.
Still, Silver (D-Manhattan) Tuesday indicated major cuts are in store. "Everything the governor has proposed is on the table," he said.
Republican lawmakers expressed concern with the tax and fee increases.
"Instead of raising taxes, we need to be reducing them," said Assembly Minority Leader James Tedisco (R-Schenectady).
Paterson did not rule out income tax increases but said spending reductions are the priority. He also defended the fee and sales tax increases, saying they would be less harmful to the state's economy.
"If you start taxing at times when [revenues are] receding, you'll drive job creators out of the state," Paterson said.
Additional items the state is considering raising fees and taxes on:
- An "iPod tax" that charges state and local sales tax for "digitally delivered entertainment services" - in other words, that new Beyonce song you download.
- State sales tax at movie theaters, sporting events, taxis, buses, limousines and cable and satellite TV and radio.
- Costlier driving with the repeal of the 8-cents-per-gallon sales tax cap on motor and diesel motor fuel, plus and increase in the auto rental tax.
- Tuition increases at SUNY and CUNY, $620 and $600 a year respectively.
- A 50 cent tax on cigars. The current tax is equal to 37% of the wholesale price, or 34 cents a cigar.
- No more sales tax break on clothes and shoes worth $110 or less, except during two weeks a year.
- Higher taxes on wine, beer and flavored malt beverages. He would also impose an 18% tax on non-nutritional drinks like soda.
- The rich would pay more for luxury items through an additional 5% tax imposed on cars costing more than $60,000, aircraft costing more than $500,000, yachts costing at least $200,000 and jewelry and furs costing in excess of $20,000.
- In addition, a host of a fees, including those related to motor vehicle licensing and registration, parks and auto insurance, would go up, as would various state-imposed fines.
With Kathleen Lucadamo