A Black Market for Coca-Cola!

December 17, 2008

It’s gonna happen…

New York governor, David Paterson, unveiled his budget. He’s recommending tax increases (or new taxes altogether) on all kinds of stuff. Here’s a list of some of the new taxes I found in this article:

• An “iPod tax” that charges state and local sales tax for “digitally delivered entertainment services” – in other words, that new Beyonce song you download.

• State sales tax at movie theaters, sporting events, taxis, buses, limousines and cable and satellite TV and radio.

• Costlier driving with the repeal of the 8-cents-per-gallon sales tax cap on motor and diesel motor fuel, plus and increase in the auto rental tax.

• Tuition increases at SUNY and CUNY, $620 and $600 a year respectively.

• A 50 cent tax on cigars. The current tax is equal to 37% of the wholesale price, or 34 cents a cigar.

• No more sales tax break on clothes and shoes worth $110 or less, except during two weeks a year.

• Higher taxes on wine, beer and flavored malt beverages. He would also impose an 18% tax on non-nutritional drinks like soda.

• The rich would pay more for luxury items through an additional 5% tax imposed on cars costing more than $60,000, aircraft costing more than $500,000, yachts costing at least $200,000 and jewelry and furs costing in excess of $20,000.

• In addition, a host of a fees, including those related to motor vehicle licensing and registration, parks and auto insurance, would go up, as would various state-imposed fines.

You watch. People will drive over to New Jersey to buy their Coke.

Couldn’t picking and choosing various items to tax more than others be considered discriminatory? Also, what happens after the state overcomes their budget crisis? Will they drop these silly taxes? My guess is no. Once they get a taste of that money coming in, they’ll spend it!

What are your thoughts on Governor Paterson’s proposed budget? Is he crazy or on the right track?

21 responses to A Black Market for Coca-Cola!

  1. well… I don’t agree with picking and choosing, but he’s got cahones.

    Everyone in Gov’t is deathly afraid of raising taxes for the masses (not just the rich), he’s saying to freakin’ bad… EVERYONE will pay more, not just the rich. Good for him.

  2. we already have the cheaper gas here in NJ…i guess we’ll have the cheaper soda now too!

  3. Don’t they pick and choose with tobacco and alcohol taxes? In Maine they “fund health care” for the uninsured.

  4. If you’re gonna be taxed on your CoCola, may as well get the stuff from Mexico with sugar in it rather than corn syrup.

  5. I don’t think it’s the government job to discourage specific types of consumption (what’s wrong with cigars? Or why is it that $45k cars are ok but $50k cars aren’t?). Raising taxes should be a separate action. So he should just raise the income/sales tax an equivalent amount instead of imposing all these “hidden” taxes.

  6. Sounds pretty crazy to me to just suddenly decide to tax random more items people use on a daily basis. What’s next, a tax to use public restrooms? It’s going to annoy a lot of people. I know some sites already tax specifically in NY, so seeing more of that is nothing new. The rest is going overboard, NY already has the highest taxes.

  7. Wow… this is horrible! You know that everyone of these companies will be going to compensate this somewhere else and they will likely be lobbying for some sort of subsidy due to unfair practices. Most likely consumers will have to pay double to cover these stupid taxes.

  8. I lived in Staten Island, NY for 19 years, and we always drove over the Outerbridge to go to the Woodbridge Mall and avoid paying sales tax. Of course, back then (mid-late 90’s) gas was much cheaper and the tolls were more manageable as well.

    I think that the tax on digital media is one place all governments need to look at for revenue. Any time a movie, song, whatever is downloaded, the seller should be charging the state and local sales tax on the purchase. The luxury item tax is completely stupid especially after he purchased a $21,000 custom stitched antique rug for the governor’s mansion.

  9. Yes, I believe those taxes are discriminatory, and agree that they could be permanent. There are already too many taxes. If the funds were managed wisely, and some luxury programs cut out, there would be sufficient money. Instead, like the schools, they will take more money, spend it as though it is infinite (but not on essentials like classroom air conditioning in California), and then cry out for more funding.

  10. I’ve heard (though not investigated) that the U.S. yacht-building industry was pretty much destroyed by “luxury taxes” that were passed on the assumption that the rich wouldn’t even notice a few more taxes here and there.

    So all those yacht-builders were put out of work.

    I’m glad I don’t live in NY (or CA, or MA, or DC, or MD, or…).

  11. Amen #4, Sam! MX Coke is the best. Years from now I’ll tell my grandchildren that pop (yep, that’s what we say in IL!)was once made w/ sugar & that I flew to Mexico to find the elusive elixir….

  12. @Eric J. Nisall:
    Who should get the state/local sales tax, and whose state/local sales tax should be charged to the consumer?

    It’s unreasonable to expect every Internet vendor (most are Mom and Pop shops, not Amazon) to compile and maintain a list of state and local sales taxes across the US. Let’s say a guy on a business trip/vacation buys an e-book online. Not only do we have the seller’s home location and buyer’s home location, but potentally the ‘place of sale’, and would the location of the seller’s web server come into play? Sometimes they are located in a completely different state.

    I’m sure governments don’t want to lose the tax revenue, but I sure don’t know how they plan to keep track of all that.

  13. @Jeremy:

    The way it works currently is that if a company sells anything to a consumer who is in the same state in which the item is “delivered” from, the seller is required to collect sales tax based on that particular locale’s rates. There is also a law, at least in Florida that any purchase made across state lines is supposed to be reported to the Department of Revenue and the state sales tax is to be paid on those purchases. Of course, no one to my knowledge follows that particular law, but it has been enforced upon audits in certain instances where proof was found by state agencies over the years.

    By no means do I think that it is an easy thing to implement, but one way is a flat sales tax across the nation, so that it would not matter who made the purchase, what their state of residence is, or where the purchase was made, it would be the same tax rate across the board. This would certainly save many needed state-sponsored programs, such as public services, schooling, and after-school programs. And, it would avoid any confusion that you have eluded to.

  14. What if it works? What if the tax increase actually does discourage people from purchasing these items? Won’t that DECREASE revenue? What will they do then, when no one purchases these? (And then they go give their tax $$ to New Jersey? lol)

  15. Hmmm, raising taxes when we’re (quite possibly) in a depression, where has that been done before and how well did that work out?

  16. JLP says:
    Also, what happens after the state overcomes their budget crisis? Will they drop these silly taxes?

    I don’t think they have to worry about overcoming the budget crisis. By raising taxes this way they are about to guarantee a permanent budget crisis. Additionally, as people refuse to buy newly taxed items, demand goes down, prices go down, layoffs occur, etc. Just glad I don’t live in NY.

  17. My husband is an endocrinologist and he’s always said the #1 problem with diabetes is soft drinks. He said its the root of the problem (of course there are other factors, but this is #1). Patterson could be looking at soft drinks like many look at tobacco – health risks and higher health care costs.

    I live in MEmphis and pay 9.5% sales tax. I could drive 10 mins to Arkansas and pay 6% or 15 mins to Mississippi and pay 5.5%. But I don’t. It isn’t worth my time and gas money. Sure if you are in NJ for other reasons you might stop or if you have a large family you might shop over there. But most people won’t.

  18. I just want to put in my $0.02 here as a Canadian. Personally, I am not against taxes. We pay lots of tax here, north of the border. However, we also have better roads, healthcare, social services, lower crime, and a better quality of life (ranked 4th on the HDI) than the U.S. (ranked 12th).

    This isn’t a Canada vs. USA post; I have just always wondered why most Americans are so against taxes. Anyone who chips in with friends to buy a pizza knows that you can get a better result when multiple people contribute dollars. As long as the political system isn’t too corrupt (and it takes an educated populous to ensure this), then I think taxes are beneficial. It is when taxes start being cut that you should wonder what services will be taken away from you.

  19. I think that this is the wrong economic environment to raise taxes but I don’t see where they have much choice. The only other option is layoffs for government employees. It is almost impossible to issue any low interest municipals in this climate.

  20. When I lived in NYC I didn’t have a car to haul coke back from Joisey. Not an unusual state of affairs for several million NYers 🙂

    It’s hard to get worked up over taxes on garbage like coke or cigars, it’s the same as taxes on cigarettes in my mind. I don’t drink coke, but am a beer drinker and have no issue with the extra taxes on booze.

  21. @Patrick from Canada: When you chip in to buy pizza, you do it voluntarily. Taxes aren’t voluntary, and you have no control over what the money gets spent on.

    To all: I don’t know how it is in other states, but sales tax in New York is divided between a flat state sales tax (4%) and county sales taxes that vary (most are around 4%; my county is 4.75%). The 18% sales tax proposed for soda is just the STATE sales tax. The total that people in NY will pay in sales tax on soda is closer to 22-23%, depending where they live.

    Picking and choosing what to tax DEFINITELY is discriminatory. I don’t think Paterson has even tried to address that claim. Maybe he thinks it’s okay because it’s “good” discrimination….?