'iTax' is one of 137 additional fees for New Yorkers as state governor tries to ease budget crisis

New Yorkers who download music to their iPods are to see the cost rise after the state governor, David Paterson, slapped a 4% tax on the practice as part of an attempt to ease a massive budget crisis.

The charge, which has been nicknamed the iTax, will also cover ebooks and other "digitally delivered entertainment services". It is one of 137 additional fees the state will exact from residents in its 2009-10 budget. Income from high-earning and highly taxed Wall Street financiers has nosedived since the credit crunch, leaving the state with a $15.4bn budget gap.

To try to close it, Paterson has risked incurring the wrath of multiple groups of voters as he pushes up taxes and slashes spending.

One of his most innovative moves is a charge on sugary soft drinks, dubbed the obesity tax. Any non-diet fruit drink that contains less than 70% natural fruit juice will be subject to an 18% tax. State officials said the tax would combat obesity, which affects one in four New Yorkers, but there was no disguising that it would raise more than $400m in the fiscal year, rising to $539m the year after.

Other products and services to be hit by higher taxes will be taxi rides, petrol, cigars and beer, manicures and massages, and tickets to cinemas and sports arenas.

The budget includes cuts of almost $10bn to hospital and school subsidies. Efforts to reduce class sizes and improve healthcare for poor families are likely to suffer.

"Tax Hell" was the headline blazed across the front page of Rupert Murdoch's New York Post.

The tax on music and video downloads will make New York the second state after New Jersey to impose such charges through legislation. A separate sales charge is exacted by Apple through iTunes in 18 states.

Internet trade organisations have protested about the idea, saying it will merely increase piracy. The trade group NetChoice argued that downloading should be encouraged – as it involves no environmentally damaging packaging – rather than discouraged through taxation.