When I first read that New York City Governor David Paterson was planning to introduce the iTax, I thought it had to be a joke:
New Yorkers who download music to their iPods are to see the cost rise after the state governor, David Paterson, slapped a 4% tax on the practice as part of an attempt to ease a massive budget crisis.The charge, which has been nicknamed the iTax, will also cover ebooks and other “digitally delivered entertainment services”. It is one of 137 additional fees the state will exact from residents in its 2009-10 budget. Income from high-earning and highly taxed Wall Street financiers has nosedived since the credit crunch, leaving the state with a $15.4bn budget gap.
To try to close it, Paterson has risked incurring the wrath of multiple groups of voters as he pushes up taxes and slashes spending.
One of his most innovative moves is a charge on sugary soft drinks, dubbed the obesity tax. Any non-diet fruit drink that contains less than 70% natural fruit juice will be subject to an 18% tax. State officials said the tax would combat obesity, which affects one in four New Yorkers, but there was no disguising that it would raise more than $400m in the fiscal year, rising to $539m the year after.
Other products and services to be hit by higher taxes will be taxi rides, petrol, cigars and beer, manicures and massages, and tickets to cinemas and sports arenas.
A piece of advice: You might want to consider hard-to-dodge taxes on goods with inelastic supply or demand.
Erik J. had this sardonic comment to make:
If only there were some popular product that’s currently a drain on government budgets but completely untaxed, that could be made legal and taxed with minimal social disruption.