New York City Comptroller William C. Thompson, Jr. today testified before New York State Senator Frank Padavan’s Task Force on Immigration about the loss of $2.6 billion in tax revenue to the City and State as a result of the sale of 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,” Comptroller Thompson said in his testimony. “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.”

At the forum, Thompson presented findings from his report “Bootleg Billions: The Impact of the Counterfeit Goods Trade on New York City,” which shows that 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).

“New York City has a significant stake in curtailing counterfeiting because, as a large international city, it has many jobs that are tied to the creation and protection of trademarks, copyrights and patents,” Thompson said. “Those who prey upon the intellectual property of others may shrink the pool of investment in creative talent, designers, product developers, artists, musicians, and the like. And this pool of talent is one of New York City’s greatest long-term assets.”
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.

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

• 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.