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New York’s Governor Pushing for Transportation Sales Tax

LCT Staff
Posted on December 23, 2008

ALBANY, N.Y. – Governor Paterson unveiled his 2009-10 Executive budget this week which includes a slew of new fees and taxes.

While the proposed $121 billion spending plan attempts to close a $15.4 billion budget gap, the governor did not reach the core of the problem – Albany's bloated budget fueled by years of unsustainable spending increases. In fact, under his proposal, state spending would rise by about $1 billion.

Among the revenue actions taken in the budget:

• A nearly $1 billion tax hike on health insurance premiums that will drive up health insurance costs.

• Expands state and local sales tax to cover personal services such as beauty, barbering, manicure, pedicure, massage, health salon, or gymnasium services.

• Increased taxes on "luxury" items such as jewelry, boats, and furs.

• Treats all discount coupons consistently for sales tax purposes. Clarifies the circumstances in which the discount obtained with a coupon is included in the amount subject to sales tax. Currently, if a manufacturer coupon is used, the sales tax is imposed on the sale price, but if a store coupon is used, the sales tax is imposed on the discounted sales price. This bill treats all coupons as manufacturer's coupons for sales tax purposes.

• Repeals the eight cents per gallon sales tax cap on motor fuel and diesel motor fuel.

• Reauthorizes highway use tax decals.

• Imposes annual filing fees on partnerships, other than limited liability partnerships, based on their New York source income with an exemption for partnerships whose income is less than $1 million.

• Increases the auto rental tax from 5% to 6%.

• Imposes state and local taxes on transportation services. Transportation services would mean the service of transporting, carrying, or conveying a person or persons by any means, including but not limited to taxicab, charter, black car, limousine, coach, for-hire vehicle, commuter van, or other vehicle service, horse-drawn cab or coach service, pedicab service, and intra-state charter bus, vessel, train, and plane service, charter fishing service, sightseeing service regardless of the means of conveyance; whether one-way or round trip; whether to a single destination or to multiple destinations; and whether the compensation paid by or on behalf of the passenger is based on mileage, trip, time consumed or anything else. A service that begins and ends in this state would be deemed intra-state even if it passes outside the state during a portion of the trip. (LCT editor’s note: this could mean that sales tax for transportation could be set at the rate of 8%, which is the standard sales tax in New York.)

• Narrows the sales tax definition and treatment of the term "capital improvement," and thus narrows the exemption for services rendered in conjunction with work that constitutes a capital improvement.

• Extends the Unemployment Insurance (UI) interest assessment surcharge. The bill would extend, until Dec. 31, 2011, the statutory authorization for the Department of Labor to assess a surcharge on employers for payment of interest due on Unemployment Insurance benefit loans from the federal government.

Source: National Federation of Independent Business

LCT Staff LCT Staff
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