Producers, theatre owners and others had lobbied recently for the elimination of the possible tax. They said the tax would have added as much as eight percent to the admission price of Broadway plays and musicals. Higher ticket prices, industry people reasoned, would have discouraged ticket sales, closed shows prematurely and impacted other businesses and tourism in New York City.

Governor David A. Paterson, Senate Majority Leader Malcolm Smith and Assembly Speaker Sheldon Silver announced the agreement to eliminate $1.3 billion in tax increases included in the proposed 2009-10 Executive Budget. The agreement eliminates new taxes on common items, including previously tax-free goods and services such as clothing under $110, sugared drinks, digital downloads, cable and satellite television, concerts, movies, live theatre, health clubs, bowling and more.

"The proposed tax increases we are eliminating today were only put forward as a last resort when the deficit ballooned to an unprecedented level," said Governor Paterson. "Now that enhanced federal funding is available, our highest priority must be to provide targeted relief to those who need it most during this economic crisis — average New Yorkers struggling to make ends meet."

These restorations will be financed through aid from the American Reinvestment and Recovery Act (ARRA), which is expected to provide New York with $6.5 billion in fiscal relief through the end of 2009-10.

Charlotte St. Martin, executive director of The Broadway League, the trade group representing theatre owners, producers and presenters, stated March 11, "We want to express our appreciation to Governor Paterson, members of the Senate and members of the Assembly for their decision to use Federal stimulus funds to eliminate the proposed tax on Broadway theatre ticket purchases. "Our goal is to encourage theatregoers to support Broadway and New York City, and in these difficult economic times, higher ticket prices could be devastating to our industry. We are grateful that the government recognized our concerns and took decisive action to eliminate additional financial burdens on theatre patrons. It is a positive reflection of our collaborative efforts to maintain Broadway as the No. 1 generator of tourism dollars in New York City."

David Lotz, communications director of Actors' Equity Association, the union representing actors and stage managers, released this statement March 11: "Actors' Equity Association applauds Governor David Paterson, Majority Leader Malcolm Smith and Speaker Sheldon Silver in their announcement today to eliminate $1.3 billion in tax increases in the 2009-2010 Executive Budget, including the proposed tax on tickets to live theatre. Broadway, Off-Broadway and touring productions are important economic engines, bringing thousands of theatregoers and tourists to our city and state each year."

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In an effort to close a record $13.7 billion budget deficit, New York Governor David Paterson's Executive Budget for 2009-10 had recommended increased fees and taxes in many areas of public life, including a four percent tax on theatre tickets.

It was expected that the City of New York would add its own four percent tax on top of the state tax on show tickets.

In a troubled economy, producers were not happy about the possible added tax.

"We are opposed to any increase in taxes that will further damage the economies of Broadway and Off-Broadway, and are working with the unions and our industry partners both on and off Broadway to develop a coordinated initiative to oppose this effort," St. Martin previously stated. "While we recognize that no one wants increased taxation, we believe that a tax of over eight percent may decrease attendance further and possibly lead to more closed shows...and we want to keep as many people employed as possible during this time of economic uncertainty. When Broadway is damaged, New York is damaged."

According to information provided by The Broadway League, "the State's tax would be four percent, but the Governor's budget would authorize the City and MTA to follow suit and assess their own taxes on theatre tickets (in addition to the state's tax). Normally, the City and MTA must get permission from the State (via enactment of legislation) to increase the tax they assess on NYC residents. However, New York State tax law would allow the City and MTA to add their own theatre ticket tax without additional legislation. The three taxes (State, City and MTA) combined will exceed eight percent."

Under the heading of Tax Reforms and Actions, the budget proposal (unveiled Dec. 16, 2008) would extend sales tax to entertainment-related spending on movies, live theatre, sports events and more. The budget cites precedents around the country: "Most states tax entertainment-related services (31 states tax concerts, theatres, and movies; 27 states tax participatory sports; 22 states tax health clubs; 36 states tax amusement parks and rides; 34 states tax circus admissions)."