Regulations

LIMO TAX FALLOUT: Operators To Pass On Costs

LCT Staff
Posted on May 13, 2009

Editor’s note: While a New York sales tax hike only affects operators within state limits, such a measure should concern operators everywhere. It serves as a classic example of how governments have the ability to compound the damage of a recession for small- to medium-size businesses. What’s worse, taxi-cabs and motorcoaches have been exempted from this revenue grab. If it can happen in New York, it can happen anywhere.

SYRACUSE, N.Y. — This summer, don't blame the bride and groom if they start cursing New York from the plush seats of a stretch limousine.

Beginning June 1, the state will require limousine and livery services to collect a 4% added sales taxes from their customers.

The new sales tax could cost the typical newlyweds an extra $32 to $60 in Onondaga County, where the tax rate is 8%, said the owners of two Syracuse-area limo companies.

"In the economy we're seeing, it's hard enough for people to come up with extra money for the proms and weddings," complained Ramona Bellavia, owner of Bellavia Limousine in East Syracuse.

The limo tax is one of 52 new or increased taxes or fees that Gov. David Paterson and the Legislature approved in this year's budget to try to close the state's $20 billion deficit.

New York expects to collect an extra $6 billion in taxes and fees for the 2009-10 fiscal year because of the changes, the state Division of Budget predicted.

Critics such as the Americans for Tax Reform predict that will prompt more New Yorkers and small businesses to leave the state.

New York expects to collect most of the extra revenue, nearly $4 billion, from a so-called millionaire's tax. The state's highest income tax rate used to be 6.85%. Now, taxpayers with taxable income over $500,000 will pay 8.97%. Single taxpayers earning more than $200,000 and couples earning over $300,000 will pay 7.85%.

Many small businesses will pay higher taxes because of the millionaire's tax, said Kelly Cobb, state affairs manager of Americans for Tax Reform. But higher fees will affect everyone from Joe Six-Pack to the family scrimping on their summer vacation by going camping.

Source: The Post-Standard of Syracuse, N.Y.

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