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Assembly Proposes to Extend Sales Tax to Digital Streaming Services

Every year, NYSBA watches the New York State Budget process closely. The process begins with the Governor’s proposed budget. Then, the Senate and Assembly propose their own alternatives. On or around April 1st, they get together and work out a compromise.

This year the Assembly has proposed to extend the New York sales tax to the purchase of digital products, including paid streaming services, downloads, apps, movies, podcasts, etc. This is not an ad tax. Rather, it extends the sales tax to paid digital products purchased by consumers. Thus, the tax would not apply to the provision of off-air radio and TV services. It would not apply to traditional cable and TV satellite services. However, it would apply to consumers purchasing streaming services like Netflix or Peacock. Also, the sales tax would extend to the purchase of satellite radio services.

While not directly impacting traditional broadcasting, we have concerns with the language of the bill. We want to make sure it does not negatively impact existing and future business models. We are making our concerns known to the Assembly, Senate, and the Governor’s office.

Importantly, this proposal was not included in the Governor’s budget or the Senate’s proposal. The issue is funding the MTA for the New York City region. The Governor proposed imposing additional payroll taxes on firms located in the MTAs service area. The Assembly opposed this proposal and in its place seeded to increase corporate taxes and extend the sales tax to digital services in order to pay for the MTA.

You can see the Assembly’s proposal here.

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