New York imposes tax on downloads

In the face of a ginormous budget surplus ($15.4 billion!), Governor of New York David Paterson has levied a four per cent tax on downloads of music, movies and other "digitally delivered entertainment services". So, a 99 cent Fall Out Boy single on iTunes will now cost $1.03. A small charge, to be sure. Still, given the huge volume of downloaded media, it's bound to deliver some considerably scratch to NY's treasury. But I've got to wonder if they've thought through some of the externalities. With all the talk of digital piracy and illegal downloading, this seems like a particularly problematic policy. How many borderline 'legal' downloaders will be pushed back into the digital black market by the spectre of a new tax?

Plus, whenever you impose any regulation or fee on the Internet, the response is fast and aggressive. I think Gov. Paterson may have bitten off a bit more than he could chew on this one.