The city missed out on $21 million in tax revenue last year by not taxing digital entertainment sales, according to the Independent Budget Office.
Online music, movies and e-books and subscriptions to streaming services are not taxed by either New York City or State under the current tax-model but their physical counterparts are.
The IBO yesterday recommended that New York City and State begin taxing sale of digital goods, especially since online revenue is likely to grow in coming years. New York City could lose $41 million annually as the trend rolls on, according to the IBO.
Proponents of the recommendation argue that the current tax model is a disadvantage to businesses that sell physical media and that it discriminates against low-income consumers who are less likely to own computers and shop online.
The U.S. home entertainment market was valued at $17.8 billion in 2014, 47% of which was earned by digital sales and services.