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Wisconsin Imposes Sales Tax on DLC
Posted by Jeff Sorensen, 273 days ago Feb 26, 2009 16:08

Rock-Band aficionados might want to second guess downloading that latest Meatloaf track.

A story from The Spectator, a student newspaper from the University of Wisconsin, revealed today that Wisconsin has passed a 5 percent sales tax on “digital products,” which will include DLC games, music and ringtones.

The new tax was imposed Feb. 19 as part of a bill “aimed at narrowing a $6 billion dollar state budget deficit,” The Spectator reports, adding that the bill will go into effect Oct. 1.

In a summary of the new sales tax, the “specified digital goods” included digital audio works – which includes ringtones – digital audiovisual works and digital books, while other items included electronic greeting cards, artwork, periodicals, and yes, even video games.

This new DLC tax story comes right on the heels of another story reported over at Joystiq just yesterday about the Entertainment Consumers Association (ECA) leading an “action campaign” against a proposed digital distribution tax in Washington, Mississippi and New York, all of whom have DLC bills currently in the works. Joystiq also reported back in January of a similarly proposed tax in North Carolina.

James Stupka, a freshman at the University of Wisconsin, admitted he downloads more video games than music, but that he couldn’t see how the state could enforce this new tax.

“It just doesn’t make sense to me,” Stupka told The Spectator, “I could see where it would be beneficial … but I personally wouldn’t like it.”

State Rep. Scutt Suder (R-Abbotsford) disagrees with the new tax, saying it will “target those who can least afford it.”

“It’s basically taxing students to fill in the [Wisconsin Gov. Jim] Doyle budget shortfall,” Suder said, “and I think that’s unfair.”

In a comment post on Game Politics, a poster identifying himself as “E. Zachary Knight” from the Oklahoma City Chapter of the ECA said that the tax will not apply to points-based transactions:

“Sales tax will only apply to real money transactions. MS point or Wii point transactions will not have an added 5% point tax added to them. When you buy those points online however[sic], you will be charged sales tax. Meaning[sic], if you buy $10 worth of points, you will be charged $.50 in sales tax. But[sic] when you buy that 1000 Wii point games[sic], you will not be charged an extra 50 points.

Additionally, services that deal in real money transactions in exchange for product will be charged sales tax. That means when you buy something on PSN or iTunes, you will be charged sales tax on the purchase of the product.

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