New tax set to raise costs of digital downloads

Amanda Miller
A. Miller|02.27.09

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New tax set to raise costs of digital downloads

The Digital Distribution Tax has been around for a little while now. In fact, seventeen or more states have already adopted it, and more are considering it.

Once upon a time, digitally distributed content, such as downloaded copies of WoW and its expansions, allowed customers to avoid the sales tax that they would pay if they bought a copy from a store.

This proposed tax is poised to increase the costs of downloading music, books, videos, games, and other similar content.

Wisconsin is one of the most recent states to hop on board, adding a 5% tax to digitally distributed goods. One of the opponents, State Rep. Scott Suder, commented, "it's basically taxing students to fill in the Doyle budget shortfall, and I think that's unfair."

This tax will also affect families, and in these economic times, further taxing the people may not be the best way to drum up state funds.

Steve Delbiano from NetChoice, which encompasses Ebay, Aol, Yahoo and many others, points out that this tax is anything but environmentally friendly.

"With global warming and a world that's running out of oil, the last thing governments should do is add taxes on something that uses no oil and produces no carbon. A digital download is the greenest way to buy music, movies, and software, since it requires no driving to the store, no delivery vans, and no plastics or packaging."

The ECA, or Entertainment Consumer's Organization, a voice for the people, is leading a campaign against this tax, rallying in New York, Washington and Mississippi.

China recently chose a similar route. Instead of adding a sales tax, they imposed a 20% income tax upon digitally distributed goods, resulting in sweeping price increases.

Unfortunately, this trend might be here to stay.
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