New York City is home to $23 billion counterfeiting trade  

New York City Comptroller William C. Thompson, Jr. today released a report estimating that New York City is home to a $23 billion annual illegal counterfeiting industry, causing the City to lose more than $1 billion in tax revenues each year.

Thompson issued the report, “Bootleg Billions: The Impact of the Counterfeit Goods Trade on New York City,” at a news conference attended by industry and anti-counterfeiting experts. Overall, the Comptroller noted that New York State and New York City lost a combined total of about $2.6 billion in tax revenue in 2003 as a result of the sale of counterfeit goods.

“This illegal trade activity is depriving our residents of necessary tax revenue at a time when New York City is emerging from one of its worst fiscal crises ever and is still facing fiscal shortfalls,” Thompson said. “The loss of this revenue significantly diminishes the City’s ability to deliver essential services such as education, public safety and sanitation, and it creates a higher tax burden for all residents.”

According to Thompson, the dollar exchange of the counterfeit goods trade in New York City during 2003 was about $23 billion. This activity cost the City about $1.03 billion in lost tax revenue. That figure is comprised of unpaid New York City sales taxes ($380 million), business income taxes ($290 million) and personal income taxes ($360 million).

“Counterfeiters pay no taxes in the operation of their underground cash economy, which profits from the theft of the intellectual property of legitimate taxpaying businesses that are represented here today,” said Timothy P. Trainer, president of the International AntiCounterfeiting Coalition, Inc. “Counterfeiters do not contribute to New York City's economy - its schools, and public services like transportation, public hospitals, fire and police forces.”

“Efforts to combat counterfeiting of luxury branded products are a challenge in New York City, the nation and around the world.” he added. “IACC members commend the city for its efforts to crack down on this epidemic of illegal and criminal activity that robs the City and State of needed funds to serve the people of New York City.”

“Everyone is a victim when music and other forms of intellectual property are stolen,” said Mitch Bainwol, CEO of the Recording Industry Association of America (RIAA). “Artists, retailers, songwriters, and music industry professionals are not the only ones hurt by piracy. The taxpayers of New York City are losing out financially as well.”

Thompson’s report examined the global connections to local illegal activity. The estimated dollar exchange associated with counterfeiting throughout the United States during 2003 was $287 billion, which is about 63 percent of the total $456 billion annual worldwide trade in counterfeit goods.

The Comptroller noted that New York City suffers from a high share of counterfeiting because of several factors, including the size of the city’s population and volume of visiting tourists, which generate high demand of both legal and counterfeit goods.

“Counterfeiting undermines the notion of fairness for those who pay taxes and endangers the future prosperity of the city’s businesses and creative community,” Thompson said. “Businesses that pay sales taxes, companies that invest in branded products or enterprises that pay licensing fees for intellectual property will no doubt lose confidence in government if these rights are not vigorously protected.”

Thompson offered a series of recommendations, including that steps to be taken to:

• Create an industry task force including representatives from New York State, New York City and the Federal government.

• Seek dedicated funding from the Federal and State governments to support enforcement.

• Encourage the creation of an intellectual property research and training center that would be associated with a public or private institution.

• Increase public awareness and education regarding counterfeit trade and implement regulations to make it easier for consumers to know when they are buying from legitimate street vendors.

• Extend the advanced techniques and benefits of industry-wide anti-counterfeiting intelligence – such as the type developed by the music industry – to industries that do not yet use such techniques.

• Increase enforcement of existing laws against the counterfeiting industry, such as enforcing safety regulations applicable to retail stores.