NY Leaders Likely To Soon Reinstate 4% Tax On Everyday Items

By JAMES FORD
WPIX-TV
Jun. 24, 2010

NEW YORK (WPIX) - Purchases of items you rely on, like clothes, shoes, even diapers, you're likely to have to pay more for soon, as an effort by Albany to put New York State on sounder financial footing.

Under a proposal being strongly considered by Governor David Paterson, Assembly Speaker Sheldon Silver and Senate Majority Conference Leader John Sampson, retail items costing less than $110, which have been exempt from the four percent state sales tax since 2007, would now be subject to the tax. That information comes from a variety of sources at the State Capitol familiar with the negotiations who have requested anonymity because of the sensitivity of the talks.

It's part of an effort to plug a $9.2 billion budget hole that New York faces, but New Yorkers who spoke with PIX 11 News are not happy to have to help fill. Bronx resident Juan Rodriguez said he doesn't want to have to pay more for the shirt on his back and adds, "Not only me, but everybody in the city feels the same way."

There is no formal poll to confirm Mr. Rodriguez's opinion, but on a related note, a Quinnipiac University poll released Thursday found a record 83 percent of New Yorkers are dissatistifed with their state government and half would vote their Assembly member and senator out of office this election year.

"The resentment is bigger than we've ever measured," said the poll's executive director, Maurice Carroll.

And that resentment was echoed by other shoppers PIX 11 News encountered as they reacted to the proposed sales tax reinstatement. In Herald Square in Manhattan, Davion Lewis asked, "How are they going to do that when the economy is going down? And a lot of people don't have jobs right now. What's going to happen?"

What the governor and budget experts hope will happen is that the state would raise about $300 million in revenue from the 4% tax. That translates into $4 more out of your wallet for every $100 you spend, like the $100 Brenda Caban of Brooklyn said she might ordinarily spend on a sweater. "That sweater would stay on the rack," she told PIX 11 News, "because I wouldn't have the money to buy it. We're in a recession!"

One of two officials who spoke anonymously with the Associated Press said the proposal would eliminate the 4% sales tax exemption in coming months through the end of the fiscal year, then restore it at a lower level Jan. 1. That level has not has not yet been determined, according to the official.

There have been conflicting reports about a moratorium on the tax during the weeks before schools go back in session. Some Albany sources say a sales tax-free holiday would be put in place to allow parents to better afford back-to-school clothes and accessories for their children, but an official who spoke with the AP said that the state would not offer any sales tax moratorium for back-to-school shopping and other occasions that have accompanied past changes in the clothing tax.

Meanwhile, the governor himself, Democrat David Paterson, wouldn't discuss details of revenue proposals. "They have some proposals on the table," Paterson said after a closed-door meeting with Democratic legislative leaders. "Frankly, they don't sound bad."

Assembly Speaker Sheldon Silver would only say that a number of options were discussed.

Paterson said tax, fees and other increases are needed in part because New York may lose at least a portion of $1 billion it expected in Medicaid reimbursement from the federal government.

Silver said he hopes to get a budget passed within days, before Paterson's deadline of Monday to impose one.

Lawmakers would be forced then to accept Paterson's budget provisions as part of an emergency spending bill or shut down government.

The budget so far includes raising the cigarette tax to the highest in the nation, $1.60 added to the current $2.75 per pack tax with New York City tacking on an additional $1.50 in local tax. In additon, Paterson's proposal to cap all local property taxes - among the nation's highest - appears unlikely at this point.

Some lawmakers expressed concern over voters' reaction to the whole budget mess. Albany legislators have each already had more than $18,000 in salary withheld under law since April 1 budget deadline was missed.

Now they face a budget vote that will shape many of their election campaigns this fall. Allowing Paterson, who is not seeking election this year, to impose a budget might be better than being responsible for one that cuts school aid, lays off teachers, cuts other services and raises the cigarette tax. But being part of the first legislature to allow him to do so might not be much better.

"It puts us in very troubled waters," said Sen. Bill Perkins, a Manhattan Democrat. "For some, it may be a 'do or die.' For some, it won't be."

The legislature has so far approved Paterson's emergency spending bills over the last three weeks, but those budget bills had general support by the Assembly and Senate. Monday's emergency bill could include Paterson's more controversial $1.4 billion cut in school aid as well as his plan to give the State University of New York more autonomy including the ability to set its own tuition. Rejecting Monday's bill would shut down government.

"Senate Republicans will not vote for any budget that includes new taxes, fees or borrowing," said Senate Republican leader Dean Skelos of Nassau County. If that holds, the GOP would require all 32 Democrats in the Senate to vote for the budget bill if it is to pass.

A key Democratic senator, Pedro Espada Jr. of the Bronx, said an increase in the sales tax may not get support from him or his conference because it's a regressive tax.

"The governor has backed himself into a corner with a deadline, nobody else has accepted that deadline," said Espada, the Democrats' majority leader. "This end game, it's a very dangerous game the governor is playing."

PORTIONS OF THIS ARTICLE WERE SUPPLEMENTED BY THE ASSOCIATED PRESS

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