California Rejects Download Tax: 99 Cent Songs Will Still Cost 99 Cents

Don’t worry, you can still get Miley Cyrus’ See You Again (#8 on iTunes) for 99 cents in California. Yesterday, the state assembly rejected a sales tax on digital goods – e-books, ringtones, music, movies, games, etc.

This is different from the tax change that NY Gov. Paterson is expected to sign into law. That bill shifts the responsibility from the consumer to the online retailer for collecting and reporting some online sales taxes. The California bill would have charged you a sales tax for downloading Mariah Carey’s E=MC2 (#1 album on iTunes), which would have taken the price from $10.99 to almost $12.

The California bill narrowly failed (it got 4 votes and needed 5 to get out of committee). But we don’t think we’ve seen the end of this online tax craze. For one thing, the assemblyman who introduced the bill plans to reintroduce it. But furthermore, states need money, and they get a ton of it from sales taxes. And as brick and mortar retailers suffer, where are the states going to look? Online.

But maybe the lobbying will be able to save us: 130 companies and organisations, including Apple (AAPL), Yahoo! (YHOO), Microsoft (MSFT), record labels and movie studios, opposed the bill, and only 6 were registered in favour of it.

See Also:
New York Passes “Amazon Tax”: Could Set Nasty Precedent

Amazon to Eliot Spitzer: Pound Sand

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