State tax on online services?

Republicans, Billy Jones oppose taxing digital media subscriptions, Uber/Lyft, online delivery

ALBANY — State legislators are considering a new tax on streaming entertainment to support mass transit infrastructure, as well as a 25-cent package delivery fee and a surcharge on ride-hailing services.

In their budget proposal released last week, the Democratic-controlled Assembly called for an 8% sales tax on digital media subscription services like Netflix, HBO Max, Spotify and Amazon Prime. The tax would be split between a 4% state share and a 4% local share, the same way sales tax is administered for physical products.

That 4% state share would go to fund transportation systems, primarily giving millions to the beleaguered New York City Metropolitan Transportation Authority.

They also proposed a state-collected 25-cent surcharge for package deliveries for online shopping and food delivery services including restaurant delivery. Medicine, food, diapers and baby formula would not have a fee charged. That would bring in an estimated $300 million in its first year.

Ride-sharing services like Uber or Lyft would also see another surcharge added on to every trip in New York City, although traditional taxi services would be exempt. That fee could give the MTA another $240 million.

Projections indicate the streaming taxes alone would raise $29 million for the MTA, and $21 million for public transportation networks in the rest of the state. The tax would be levied even in areas that do not have mass transit systems in place.

It comes as the MTA, the largest transportation agency in the country, faces growing budgetary shortfalls. The downstate transport agency has asked for $1 billion in fiscal year 2024, or otherwise would have to raise the fares for its fleet of subways, commuter trains and buses by 5.5%. Fare raises at the MTA are notoriously unpopular for the millions of residents and commuters to New York City. The last fare hike was in 2017, but was only for weekly or monthly passes, while single-ride tickets have cost $2.75 since 2015.

Assembly Republicans universally oppose the measure to levy a new tax statewide, and the entire Assembly budget proposal, on the grounds that it calls for too much spending.

“These record-setting price tags need to be paid for somehow, and the proposed tax on streaming services is just another way Albany Democrats want to squeeze the middle class out of their hard-earned dollars,” said Assemblyman Kenneth Blankenbush, R-Black River. “Needless to say, I oppose this proposal.”

Assemblyman Scott Gray, R-Watertown, said he opposes the taxes and fees as well, especially in the face of leaderships wholesale rejection of a proposal to make sales tax collections for the counties permanent.

“It’s disingenuous to sit here and pass a tax on streaming when they want to tell the counties that they’re not going to make their sales tax permanent,” he said. “It’s two different kind of messages.”

Assemblyman D. Billy Jones, D-Chateaugay Lake, is also opposed to the tax. Representing Franklin, Clinton and part of Essex counties, Jones said he supports funding the MTA because it creates jobs in the transport manufacturing field in his district, but he doesn’t support requiring upstate New Yorkers to provide that funding.

“Upstate New Yorkers should not be responsible for funding MTA, and this proposed tax on streaming services would force my constituents to pay for something they do not even use,” he said.

Jones said he will continue to support MTA funding, but through other avenues that don’t spread the cost of the local system across the entire state.

The Assembly bill is just one proposal in the state budget process, and other suggestions for how to fund the MTA have been proposed. Gov. Kathleen Hochul has proposed raising payroll taxes statewide and generate $700 million, while legislators for upstate New York have suggested a raise on corporate taxes for companies making over $5 million annually, up to 9.25%.

Any solution has to be developed soon, as the state budget is due by March 31, although Hochul has not ruled out delaying the budget over her controversial changes to state bail laws.


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