SACRAMENTO - California Assemblyman Charles Calderon, D-Montebello, has proposed a sales tax on porn downloads and digital music purchases.
California Assembly Bill 1956, which Calderon introduced in February, will have a hearing before the Tax and Revenue Committee on Monday.
Digital property such as downloadable media currently is not subject to taxation in California. For the tax to be enacted, the State Board of Equalization would have to draft a sales-tax regulation that would include digital property in California's definition of taxable tangible personal property.
The Legislation's definition of "digital property" includes downloadable equivalents of tangible property such as music, movies and books, "which, if delivered in a tangible storage media, would be subject to sales and use tax."
California currently taxes the retail sale or use of tangible personal property. However, the state does not tax the retail sale or use of electronically transferred "intangible" property such downloadable media.
Calderon's proposed legislation aims to tax the downloadable equivalents of tangible property.
The proposal is being soundly criticized by Republicans, who oppose any tax increases pursued as solutions to the state's deficit problem.
"One of the growing arts of our economy, tech online and Internet, is something we should encourage without having these types of taxes," said Assemblyman Guy Houston, R-Livermore.
According to Michelle Steel, a Republican assembly member from Orange County, the result of the proposed tax is that "all these e-commerces are going to move outside of California."
"California is the high-tech state," she said. "Why would you want to kick them out?"
While the Board of Equalization estimated that the tax would generate about $114 million a year in local and state revenue, Calderon estimated that it would generate about $500 million annually.
"If you include the adult entertainment industry," Calderon said, "I think it could go into the billions."
