North Carolina Considers a Download Tax
January 29, 2009 at 1:25 PM (PT)
Its budget ravaged by a deep recession, a NORTH CAROLINA legislative committee is considering the viability of imposing a tax on digital transactions, be they for music, games, or books. Since digital commerce is growing, some legislators think a tax on those transactions could help alleviate the current budget squeeze.
According to ARSTECHNICA.COM, at the same time NC state senator MARC BASNIGHT told reporters that he didn't expect lawmakers to consider raising taxes to supplement shrinking budgets, the General Assembly started looking to tax the sales of digital downloads, as one part of a larger effort to modernize its tax code to incorporate digital distribution and services like PAYPAL. NORTH CAROLINA is expected to fall $2 billion short in revenue this year, and initial research says that a digital tax on downloads could generate around $12 million over the next fiscal year.
A digital transaction tax is already in place in NEW JERSEY and a several other states; what's more, a NEW YORK judge just ruled that AMAZON.COM, OVERSTOCK.COM, and others will have to start collecting sales tax on transactions made to New York residents. While iTUNES and AMAZON could easily withstand such a tax on their business, ARSTECHNICA warns that "a move like this could be a nightmare for smaller shareware vendors and content outlets if the trend picks up and sweeps across states."