FOR IMMEDIATE RELEASE
June 1, 2009
MAYOR BLOOMBERG AND COUNCIL SPEAKER QUINN ANNOUNCE AGREEMENT ON NEW REVENUE PACKAGE TO HELP BALANCE FY 2010 BUDGET
Proposals Require Albany Approval and would Eliminate or Reduce Unincorporated Business Tax on Small Businesses
Shift to Single Sales Factor would Encourage Companies to Locate or Remain in New York City
Changes would Reduce Tax Burden for 44,000 Local Businesses to Create Jobs and Grow the City's Economy
Mayor Michael R. Bloomberg and City Council Speaker Christine C. Quinn today announced an agreement on a package of proposed new revenue enhancements to help balance the Fiscal Year (FY) 2010 Budget. The changes in City tax policy, all of which need to be approved by the State legislature and signed into law by Governor, would produce approximately $887 million in new revenue for the FY 2010 budget.
The agreement proposes a series of revenue enhancements: an increase of 0.5% in the City Sales Tax, a repeal of the Clothing Tax Exemption for clothing items priced over $110, applying the full City Sales Tax to electric and natural gas customers that purchase energy from non-utility companies and a tax conformity package, which includes loophole closers, that will bring City tax policy more in line with State policy. The conformity package will produce immediate new revenue but will also reduce taxes on 27,000 business headquartered in New York City by moving to a Single Sales Factor of taxation and eliminate or reduce the Unincorporated Business Tax for 17,000 unincorporated small businesses. The Mayor proposed the FY 2010 Executive Budget on May 1st and the Mayor's Office has been working with the City Council since then to finalize an on-time, balanced budget for the eighth consecutive year.
"With tax revenues down $5 billion, the economic crisis provided us with only a menu of onerous options to balance the City's budget," said Mayor Bloomberg. "We've aggressively cut spending while maintaining the core services needed to keep our City moving forward. And we've used billions prudently saved during the boom years to help balance this year's budget but unfortunately that is not enough and additional revenue has to be raised to help address a multi-billion dollar budget gap. While we have been forced to make some unpopular choices, this package has a silver lining - significant tax relief for 44,000 local businesses that will help create and retain jobs for New Yorkers and grow the City's economy. After a lot of collaborative work with the City Council, we now need the State legislature to act quickly."
"Today's revenue package will both ensure that we can balance the budget in the short-term while making our City more competitive in the long-term," said Speaker Christine C. Quinn. "Keeping the tax exemption on clothing and footwear for purchases under $110 dollars will make sure that families aren't taxed on necessities. Switching to a Single Sales Factor will encourage more companies to create jobs here and lead to greater diversification of our economy. And ending the unfair double taxation on freelancers and small businesses with incomes up to $150,000 will keep more money in the pockets of New Yorkers at a time when they really need it. This year, there were no perfect options. But this agreement will balance the budget and create job opportunities for New Yorkers."
"I understand these are tough times, but in order to avoid layoffs and cuts that would affect city services, we need to take action to raise additional funds," said Finance Committee Chair David Weprin. "This agreement preserves the sales tax exemption on clothing under $110 and eliminates the fee on plastic bags - two proposals that will help New Yorkers through difficult financial times."
I. Tax Conformity Proposals
Single Sales Factor
Eliminate or Reduce the Unincorporated Business
II. Sales Tax Increase and Clothing Tax
III. Sales Tax on Energy Purchases from
Stu Loeser/ Marc La Vorgna (212) 788-2958
Jamie McShane / Andrew Doba (Speaker) (212) 788-7116