States seek levies on digital-media downloads
April 13, 2006 4:00 AM PDT
Internet shoppers accustomed to tax-free purchases from Apple Computer's
iTunes Music Store soon may be in for an unpleasant surprise.
State legislatures and tax officials, eager to find new ways to boost
government spending and curb budget shortfalls, are eyeing the
burgeoning market for digital downloads as a potentially lucrative
source of revenue.
A CNET News.com analysis shows that 15 states and the District of
Columbia now tax downloads of music, movies and electronic books. Some
high-tax states such as California do not levy the same charge on iTunes
downloads, but that could soon change.
"More states are beginning to tax downloaded products," said Steve
Krantz of the Council on State Taxation, which represents companies that
do business in many states. "Some are doing it through specific
legislation. Others are doing it through the interpretation of previous
New Jersey Gov. Jon Corzine, a Democrat, proposed in his budget that
"downloaded music and videos" be taxed starting Oct. 1. The state tax
agency expects legislation to be introduced in June.
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