Council Sends Sales Tax to Assembly
June 15th, 2009
The City Council thinks something might gone done in Albany this week — at least in the Assembly.
In a rare move that splices the city’s budget process, the City Council approved a revenue package this afternoon, which will increase the sales tax by .5 percent and removes a sales tax exemption for clothing purchases more than $110. The Bloomberg administration and the City Council have not yet agreed on a spending package for fiscal year 2010, although I am told one might be pending very shortly.
The tax package, which includes tax breaks for corporations and small business owners, was approved by a vote of 48 to 0, with the exception of the sales tax increase, which was approved by a vote of 37 to 10 with one abstention (a full breakdown is after the jump). The revenue package must now be approved by the State Legislature.
The business taxes include doing away with “double-taxing” freelancers and unincorporated businesses who make under $100,000. The break would apply to about 11,000 freelancers and small businesses, according to the council. The city will also move to a single sales factor for its corporate business tax. Currently it uses property, payroll, and sales to tax corporations. If approved in Albany, the city would move to a formula which bases taxes solely on sales. The move is expected to bring more businesses to the city.
The entire revenue package will create $887 million.
The major disagreement at the City Council was over the increase in the sales tax, with some members calling it a “regressive tax” that hurts the New Yorkers who suffer the most. Others said the city was left with little choice, and a sales tax increase was much better than layoffs.
“If we don’t authorize the sales tax, as distasteful as it is, there will be layoffs,” said Councilmember Lewis Fidler, who voted in favor of the increase. “I prefer we find it somewhere else, but that is not the choice we have.”
Those who voted against the measure included: Tony Avella, Charles Barron, Elizabeth Crowley, Eric Gioia, Vincent Ignizio, Melinda Katz, Kenneth Mitchell, Eric Ulrich, Jimmy Vacca and Jimmy Oddo. Of those, three will be seeking citywide office this fall: Katz for comptroller, Avella for mayor and Gioia for public advocate. Peter Vallone abstained.
Hints of electoral politics were scattered throughout today’s tally. After John Liu, a candidate for comptroller, voted in favor of the increase, a colleague, Letitia James, shouted “courage” from across the chamber.
Others defended their votes soon after, including Katz, who put out the following statement.
“I voted today against an increase in the sales tax because it will disproportionately burden middle-class New Yorkers who are struggling under the weight of high unemployment, decreasing home values and diminished savings in a time of economic uncertainty. A sales tax is a regressive tax. We are all aware that this is a very important time for the city’s economy and we need to be forward-thinking about our fiscal situation. But increasing the sales tax and putting this kind of burden on our workers, our tenants and our middle class isn’t the way to balance the budget.”
Overall, today’s vote could be interpreted as a signal of confidence from the city that they will have an on-time budget, despite the mayhem occurring upstate. If they move forward with their own fiscal plan, maybe that will spur the State Senate to action.
The city budget must be approved by July 1.By Courtney Gross on June 15, 2009, 2:12 pm
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