Clothes Tax In State Budget Hurts Poor, But I Had To Do It, Gov. Paterson Says

The state of New York passed a new budget bill Tuesday night, containing a controversial sales tax on clothing. Governor Paterson himself admitted yesterday that the tax will hurt low-income citizens, but still had to be done. The tax goes into effect October 1^st.

"Begrudgingly, to get the budget done, we accepted the sales tax, but it's really going to hurt low-income people," he said.

The final budget bill, passed by the Senate Tuesday night after a long day of political horse-trading, calls for a 4% state sales tax on clothing and shoe purchases of $110 or less set to begin Oct. 1.

Controller Thomas DiNapoli, a Democrat, slammed the $136 billion spending plan as risky.

"All in all, this budget was not worth the wait," he said, noting it reeked of "dysfunction."

Nowhere was the dysfunction more apparent than in the Senate, where an upstate Democrat blocked completion of the budget for a month, with little to show for his efforts.

Continue reading at NY Daily News…

New York May Tax Clothing Sales to Narrow Budget Gap

Only a few days after New York raised the state tax rates on cigarettes, Governor David Paterson is now considering a 4% sales tax on clothing purchases under $110. The tax was put into place for 3 years once, but was repealed in 2006. Officials say the tax could raise $660 million annually.

“Taxes on clothes have been brought back to us” by legislators, Paterson said in an interview on New York City radio station WOR today. “It’s in the discussion phase.”

Lawmakers face a June 28 deadline set by Paterson for agreement on a budget covering the year that began April 1. If no agreement is in place by then, Paterson has said he will submit his own budget plan in an emergency spending bill, which lawmakers would have to approve, or shut down government.

Paterson’s $135.2 billion budget proposed earlier this year includes cuts in aid to school districts and a tax on sweetened beverages that lawmakers oppose. Additional taxes should close 10 percent to 13 percent of the deficit, or $920 million to $1.2 billion, Paterson said in an interview on radio station WGY in Albany.

Taxing clothing sales or finding revenue by other means is needed because lawmakers are balking at Paterson’s proposals to raise $710 million by allowing wine sales in grocery stores and imposing a new levy equaling 1 cent per ounce on sweetened beverages, the governor said.

Continue reading at Business Week.com…