Gov. wants to tax porn downloads

February 16, 2009 3:27:50 PM PST
Talk of a New York tax increase just got a little, er, hotter. It turns out that New York Gov. David Paterson's proposal on downloads of music and software would also apply to downloading pornography, an element unnoticed in the public debate so far.

The state Division of Budget confirmed to The Associated Press that the tax would apply to skin flicks, whether they are downloaded online or purchased through pay-per-view on television.

"By taxing it you're legitimizing it," said Michael Long, chairman of New York's Conservative Party. "You're sending a message to the children, you're sending a message to the teenagers, if you're taxing it - how can it be wrong? I don't know how you can sink much deeper."

And because of recent court decisions over the relatively new area of taxing Internet transactions, the sales tax would apply only to pornographers who are located in the state. It's a break for out-of-state Web sites that wouldn't have to collect from New Yorkers.

"It's absolutely outrageous if they're profiting off of pornography," Long said of the state. "If they're raising funds, it's encouraging the citizens of this state to download it."

It's difficult to tally how much people spend for online porn, but, a sight reviewing products and ranking their quality, performance and revenue, says the industry brought in $2.84 billion in 2006. The cable, pay-per-view and phone sex industries brought in $2.19 billion that year, according to the site.

Paterson's tax also applies to downloads of music and movies, so this government action on pornography likely wouldn't face the same legal challenges over indecency and freedom of speech as past measures because the tax isn't specifically targeting content.

The so-called "iPod tax" would tax the sale of downloaded music and other "digitally delivered entertainment services" by 4 percent.

"This is simply bringing the tax code in line with technology," said Matt Anderson, a spokesman for the Division of Budget. "Regardless of whether or not an item is purchased at a brick-and-mortar store or online, it would be treated consistently."

"With all of the free adult content out there and all of the piracy that the adult industry is dealing with, the last thing any of us need is an additional tax," said Steven Hirsch, co-founder and CEO of Vivid Entertainment Group. The Los Angeles-based adult film production company sells its material on DVDs, online streams and through cable television with pay-per-view and video on demand.

Adult movies have a growing customer base and contribute to the economy through jobs and taxes, said Hirsch. His company wouldn't be forced to collect taxes from New Yorkers, because they don't have offices in the state, but those who do have to collect may think twice, he said.

"Some of them are based in New York and certainly this would be an incentive for them to move their operations," Hirsch said. "These are very difficult times and nobody can afford to lose even one customer."