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N.Y. drops proposed taxes on iTunes, haircuts

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  • New York drops proposed taxes on iTunes downloads, haircuts
  • Gov. David Paterson plans to use federal stimulus money to balance state budget
  • Tax hikes were proposed to close $14 billion budget deficit
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NEW YORK (CNN) -- New York has scrapped a proposal that would have raised taxes on items such as sugary soft drinks, iTunes downloads and haircuts, Gov. David Paterson said Wednesday.

New York has dropped proposed tax hikes on items such as haircuts, soft drinks and clothing under $100.

New York has dropped proposed tax hikes on items such as haircuts, soft drinks and clothing under $100.

Paterson said he was dropping a number of proposed taxes after the Legislature agreed to use $1.3 billion in federal stimulus money to help balance the state's budget next year.

"The proposed tax increases we are eliminating today were only put forward as a last resort when the deficit ballooned to an unprecedented level," Paterson said in a written statement.

The tax hikes were proposed in December, as part of an attempt to close a $14 billion budget deficit for the state's next fiscal year.

Paterson said proposals were being dropped for taxes on sugary soft drinks, clothing under $110, haircuts, manicures, cable and satellite television, digital services such as iTunes downloads, concerts, movies, golf, live theater and health clubs.

The high-profile proposed taxes had drawn widespread criticism from New Yorkers.

In a statement, Paterson said the federal funding could not serve as an "excuse to avoid the tough choices we must inevitably make to get our fiscal house in order. Federal funding will cover only a fraction of our overall budget deficit, and the economic outlook remains uncertain, so we must ensure that we use this aid in a responsible manner that strengthens our state's long-term finances."

Budget negotiations are ongoing.

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