New York Governor Wants Tax on Soft Drinks and Music Downloads

Inventive tax schemes are all the rage in this time of financial crisis. States that built budget expectations centered on the housing bubble and the booming economy of five years ago are now left to try to generate new tax dollars to make up for growing revenue shortfalls. In New York, Governor David Paterson has some pretty creative strategies for taxing the citizens of his state.

In addition to increasing taxes on such everyday items as gas, cab rides, sports tickets and satellite TV service, Paterson has proposed an 18% tax on soft drinks that contain less than 70% real fruit juice and a 4% tax on music downloaded from the Internet. And while the music download proposal seems to be a simple revenue-grab on a very profitable industry, the tax on soft drinks is being portrayed as a public health initiative, much like the cigarette taxes that are popular around the country. In addition to generating an estimated $400 million in tax revenue in 2009, the soft drink tax will also likely reduce consumption of those drinks by about 5% over the same time period.

Officials within the Paterson administration are pointing to that reduction in soft drink consumption as a long-term positive for the state. New York is facing the same obesity crisis as the rest of the nation, and it is believed that reducing the intake of sugary sodas will help to ease that problem. Officials are citing the long-term reductions in public health costs as reason enough to enact the new tax strategy.

The soft drink industry is obviously opposed to the measure, saying that the problem is not their products, but a prevailing lack of exercise and physical activity among upcoming generations. Regardless of the voting outcome of these tax measures, there will certainly be several states willing to find new and creative ways to tax their citizens in the name of the greater good.