/ December 17, 2008

Proposed NY Budget to Tax iTunes, Beer, Cigars, Yachts, and more

The New York State budget proposed by Governor David Paterson will add to the tax burden of its residents with 88 fees, 10 fines, and 39 changes to the tax code.

Among other things, hair salons, sporting events, massages, and credit rating services will be taxed. Additionally, the tax on cigars and malt beverages will go up. Unpopular among urban hipsters: a new sales tax on downloading music (sorry, Steve Jobs!).

New or increased fees will also be administered – a marine fishing license, increased vehicle registration fees, and new fees for camping/cabin rentals/park passes.

Then, there is the controversial the “obesity tax.” (The new budget will tax regular soda at a rate 15% higher than diet soda.)

According to our friends at the Tax Law Blog, here’s a partial summary of what’s in the budget:

Makes personal services (such as beauty, barbering, manicure, pedicure,
massage, health salon or gymnasium services) and credit rating and reporting
services subject to sales tax statewide. Currently, only New York City sales tax
applies to these services.

Imposes a sales tax on entertainment-related consumer spending, including,
but not limited to, movie theaters and sporting events.

Imposes state and local sales tax on purchases of prewritten software,
digital audio, audio-visual and text files, digital photographs, games, and
other electronically delivered entertainment services.

Imposes a sales tax on transportation-related consumer spending, including,
but not limited to, taxis, limousines and buses.

Imposes sales tax on television and radio services provided by cable,
satellite or other similar means.

Imposes an additional 18 percent rate of sales and compensating use taxes on
fruit drinks that contain less than 70 percent of natural fruit juice and
nondietetic soft drinks, sodas and beverages.

Modifies the taxation of cigars to impose a tax of $0.50 per cigar to
simplify the administration of the tax. The current tax is equal to 37 percent
of the wholesale price or approximately 34 cents per cigar.

Increases the excise tax on wine and beer to approximately the average of
surrounding states.

The tax on wine would increase from 18.9 cents per gallon to 51 cents per
gallon, and the beer tax would increase from 11 cents per gallon to 24 cents per
gallon.

Increases registration fees for most vehicles and fees for distinctive plates
by 25 percent. The average vehicle registration fee will increase from $44 to
$55.

Increases original and renewal driver’s license fees by 25 percent. A
standard eight-year renewal will now cost $62.50, up from $50.

Creates a new fee of $10 for filing a paper personal income tax return, which
will encourage individuals to file via the Internet.

Establishes a new marine fishing license at a cost of $19 for state residents
and $40 for out-of-state individuals.

Raises administrative fees for various park activities, such as camping,
cabin rentals, golf, and marina usage, as well as for Empire Passports, passes
and permits.

Increases the cigarette and tobacco retailer fee from $100 to $1,000 for
retailers with gross sales of less than $1 million, to $2,500 for retailers with
gross sales of $1 million but less than $10 million, and to $5,000 for retailers
with gross sales of $10 million or more.

Imposes an additional sales tax on luxury goods. This proposal would impose a
5 percent tax on the price of the following items in excess of the following
thresholds: $60,000 for cars, $200,000 for vessels (including but not limited to
yachts); $20,000 for jewelry and furs; and $500,000 for noncommercial
aircrafts.

Source: Tax Law Blog

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