Paterson's proposal, issued in December, included a section titled "Close Digital Property Taxation Loophole", which would impose taxes on all digitally-delivered items, including iPod songs, digital movie rentals, and video game content. In a press conference in Albany yesterday, the governor announced that that particular provision had been removed, along with taxes on clothing over $100, haircuts, non-diet soda, movie tickets, and gasoline priced over $2.

According to Paterson, the taxes were viewed as "inconvenient and frustrating" by New Yorkers, who viewed them as a direct attack on their leisure activities, and the one thing no one wants to deal with is inconvenienced and frustrated New Yorkers.

New York skips Internet, soda and other tax hikes [Reuters]

In a budget proposal that can be read in its entirety online, Patterson calls for state worker layoffs, cuts in education and health care spending, expansion to the state's lottery program, and taxation on all digitally delivered property. From the official document:

Close Digital Property Taxation Loophole. Imposes state and local sales tax on purchases of prewritten software, digital audio, audio-visual and text files, digital photographs, games, and other electronically delivered entertainment services to achieve tax parity. For example, with the passage of this bill, a book, song, album, or movie would be subject to sales tax no matter if it was bought at a brick and mortar store or downloaded online.

I wouldn't worry too much just yet. The budget still needs legislative approval, and I can't see much of a chance of that happening, especially with New York City Mayor Michael Bloomberg firmly opposed.

Gov. David Paterson unveils dire New York State budget that includes new taxes, layoffs and cuts [NY Daily News via Game Politics]

We suppose that this sort of diversion of funds makes more sense than others. I just hope they don't limit the use of PSPs for these poor kids brought to tears by the prospect of experiencing "nature." And, please New Mexico, make sure these kids are well stocked on Happy Meals.

A Tax to Remember [The Huffington Post via GamePolitics]

"We must be sure that the measure will promote only genuine cultural projects and that it will not have the effect of an industrial policy instrument in favour of the videogames sector."

EU approves tax breaks for games [GamesIndustry.biz]

I received an interesting package from the State of Georgia over the weekend. It was from the Digital Entertainment Liaison for the Georgia Department of Economic Development's Film, Music and Video office.

Inside was a copy of the "Videogame Style Guide and Reference Manual" and little pack of press releases singing the praises of Georgia and pointing out that the state has become "a hotbed for video game industry development."

Hotbed you say? Read on.

According to the press release there are more than 50 game developers and publishers in the state employing more than 2,000 people. And Georgia is ranked number four in terms of compensation levels for game developers.

But all that's sort of icing on the cake, the meat of the pack was about how the Georgia Entertainment Industry Investment Act offers a sizable incentive to video game companies for producing games there. Devs and publishers get as much as a 12 percent tax break.

Why should you care about this? Because it means that state's are starting to woo game developers they way they woo other businesses in other industries and if they're willing to spend cold hard cash, in the form of tax breaks, then more than likely they will also be sure to protect their investment from idiotic laws that attack the product of these companies. In other words: State governments are finally starting to open their eyes to the value of the video game industry.

In a move that could have oppressed German game developers looking jealously towards the southwest, the French Parliament has approved a plan to allow game developers creating games with a "with a cultural dimension" a tax credit equaling 20% of development costs up to 3 million euros a year. That's a pretty sizeable chunk of change aimed at keeping developers in the country, providing a sharp contrast to Germany, where some game developers are looked on and treated like borderline criminals.

So what determines if a game has a cultural dimension? Anything from the story the music, the look and feel, etc., so while a game about killing space aliens on a made up planet might not fall under the criteria, killing space aliens in the Louvre to the music of Jean-Marie Leclair just might.

Devs shouldn't start counting their euros yet however, as the European Commission is currently looking the plan over to see if it constitutes a EU policy violating subsidy. Michael Fahey

France Approves Video Game Tax Credit [GamePolitics.com]

The Congressional Joint Economic Committee — a group of taxmen, economists and autocrats — have admitted that tax law has fallen "way behind" the march of MMOG progress and are now seriously looking into the issue of taxing virtual assets and incomes.

There's a good argument to be made for taxing virtual economies, of course. Second Life has over $500,000 dollars worth of in-game transactions a day, mostly in furry prostitution. Fair enough to tax virtual economies when it's possible to cash-in and cash-out of your virtual holdings.

But I'm going to tell you this: the second the Murky, Omnipresent Man cuts VAT off the top of the Helm of Fire I just bought off the Undercity Auction House is the day I motherfucking snap. Imagine a dozen law offers lying in pulsing, quivering wrecks of mutilated flesh at my feat as I stare at the sun and laugh and laugh and laugh. And when the Feds bullets tear through my flesh, turning my internal organs into slurry, my last words will be "Is that the best you pansies can do?" before the inferno-like hate dims from my eyes and my grip loosens on the throat of Dan MIller, senior economist for the JEC. Florian Eckhardt

US Congress launches probe into virtual economies [Reuters]

I walked down a little while ago to hand them the twenty euros required as a deposit. I hadn't yet done this, though they'd signed me up for a preorder there anyway over the phone.

As I handed the guy behind the counter my 20 quid, he said: "Great! Now in December you only owe us another 250 euros!"

I got dangerous. "Hold the phone. What? The suggested retail price is 250 euros. I just gave you twenty."

"Well, yes, but that's for Europe. Our VAT is higher."

I'm sorry, this shit stinks. As you may or may not know, VAT is the exorbitant regressive tax (ie: a tax that extracts more money from those with low income than it does from those with high income) that Europeans have to pay on every purchase. In Europe, it is an average 16.5%. In Ireland, it is 21%.

Okay, I'll pay your Mickey Mouse Socialist Tax, you fuckin' rat bastard commies. But let's see who's getting gouged here. European VAT is 16.5%, which is 4.5% less than Irish VAT. So, at most, I should be paying 4.5% more than the average cheese-sniffing Frenchie or Bratwurst-flossing German. 16.5% of 250 euros if 42.25. That means that 20 euros is actually almost twice as much as the difference in VAT.

You know, it's not like I can't afford an extra 10 or 20 euros. Hell, that's less than my daily booze allowance. But there's a reason Europeans complain about the price of consoles and games and it's because we're constantly getting gouged on shit like this. Being a gamer in this country is more expensive than heroin. Florian Eckhardt

The taxes would go toward building new schools and upgrading poorer ones.

You have all these kids buying video games, and sometimes they are good, some are bad and that's not my call," he said to the paper. "But I think that we can generate [money] to put toward the schools they go to."

Hinojosa's proposal predicts the state would pick up about $65 million from the tax, but does little to explain what makes videogames so special. Music, movies and other forms of entertainment don't have a specific tax, but because videogames are in the legislative spotlight these days, it must be hip to propose something game-related.

Texas Senator Proposes Taxing Games [1Up]