CA Considers State Tax on Digital Downloads

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Marketing VOX

http://www.marketingvox.com/states-push-for-tax-on-digital-downloads-038066/?camp=newsletter&src=mv&type=textlink

California is making moves that could lead to taxation of digital download purchases such as music and movies, reports CNET.

State Democratic Assemblyman Charles Calderon recently introduced a bill that would bring “digital property” under the umbrella of taxable items. The rules were previously only applicable to physical items.

While the bill was defeated this time, Calderon says he will bring it up again, possibly as soon as next week. The bill missed passage by one vote.

Calderon says such legislation is necessary in light of the changing economy. As retailers struggle, online downloads remain a rich — as-yet untapped — source of potential revenue. (California also has an $8 billion debt that needs plugging.)

Supporters of the bill include firefighters, teachers, and state employees. Opponents assert the bill is so broad it could easily expand from online music and movies to software and video games.

The New York state legislature recently passed a bill that requires online retailers to charge a sales tax for buyers in New York. It is expected to generate $50 million in new revenue for New York this fiscal year.

The promise of such funding was a concern to the bill’s detractors, which believed other states would follow New York’s example.

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