Pols call for no state sales tax on clothing

Calling the state’s sales tax on clothing and footwear highly regressive and bad for business, New York City Council Finance Committee Chairman David Weprin, New York City Comptroller William C. Thompson, Jr., other lawmakers, and members of the local business community announced their opposition to Governor Pataki’s proposal to make that tax permanent.
City shoppers currently pay a state sales tax of four percent and a .375 percent Metropolitan Commuter District tax on all clothing purchased.
The tax is considered highly regressive, because it requires low-and middle-income taxpayers to pay a larger share of their income in tax than the wealthiest taxpayers to buy the same product. This tax also puts local businesses at a competitive disadvantage, motivating shoppers to go to New Jersey, which does not currently have a tax on clothing. As a result, the city loses some $700 million in sales every year to New Jersey.
New York State’s tax-free week on clothing, which ran from January 30th through February 5th, leaves the regressive tax system basically unchanged. Seniors are unlikely to benefit much from current sales tax holidays, which mostly target families buying new clothes for school.
There can be other business benefits to tax-exempt clothing purchases. During the brief sales tax elimination in 2000, employment in city stores that sold apparel increased by over 7,000 jobs. A permanent tax exemption on clothing also brings more consumers to the city, increasing business at local restaurants, hotels, and cultural venues.
“With all the tax cuts the governor has proposed in his FY2007 Executive Budget, it is a wonder that he failed to eliminate the tax that affects the average New Yorker and local businesses most, the State sales tax on clothing purchases,” said Council Finance Committee Chairman Weprin. “In the FY2006 budget the City Council did its part to help low- and middle-income New Yorkers by altogether eliminating the City sales tax on clothing purchases under $110.”