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New York Governor Wants 'iTunes Tax'

David Paterson seeks 4% cut of digital music and movie downloads for his beleaguered state.

New York Governor David Paterson has proposed a 4% tax on music and movie downloads as part of a budget designed to help the state offset the recession's impact on its finances.

Under the plan, the 4% levy would be imposed on consumers at the time of purchase on downloads from Apple's iTunes service and other online movie and music stores.

The measure would make New York only the second state in the nation to impose a mandatory, point-of-purchase tax on digital downloads. New Jersey imposed a so-called iTunes tax in 2006.

Critics of the proposal say that cash-strapped consumers are more likely to turn to pirate services rather than pay the additional fees, which would raise the price of a 99-cent digital track to about $1.04. "You'll find that iTunes sales will drop," NYU student Nicole Stutz told Wednesday's edition of the New York Post.

The tax proposal is part of a budget that Paterson hopes will help replenish state coffers that have been drained by Wall Street layoffs and increased unemployment costs.

New Yorkers hoping to dodge the iTunes tax through alternative forms of entertainment will find little relief elsewhere if the budget passes the state legislature. Paterson also wants a 4% tax on movies, sporting events, and concerts.

Fitness buffs who like to listen to MP3s while working out face a double whammy. The proposed budget includes a 4% tax hike on gym memberships and other personal services.

The budget would also increase the cost of gasoline, beer, cable TV, drivers' licenses, and soft drinks.

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