Sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. holidays have exploded in popularity in recent years. They may be politically popular, but as we’ve written before they’re dubious taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. policy—they add to retailers’ tax compliance costs, increase uncertainty in tax law, and are non-neutral both across products and over time.
Now, some Democratic lawmakers in New York are catching on to the disadvantages of sales tax holidays, and are pushing for a permanent repeal of that state’s sales tax. From Newsday:
This week’s tax-free shopping shouldn’t be enjoyed just twice a year, according to some elected city officials, who called on Albany yesterday to permanently kill the state portion of the sales tax.
Starting yesterday and through Feb. 5, shoppers across the state will save 4 percent in state sales tax, while some areas, such as New York City and Suffolk County, will charge no sales tax on clothing and shoes costing less than $110.
“We should not have it at all; it’s a regressive taxA regressive tax is one where the average tax burden decreases with income. Low-income taxpayers pay a disproportionate share of the tax burden, while middle- and high-income taxpayers shoulder a relatively small tax burden. , it disproportionately affects the middle class and the poor,” said Councilman David Weprin (D-Hollis).
Assembly Speaker Sheldon Silver, a Democrat, has said he’s in favor of removing the state sales tax permanently.
City Comptroller William Thompson Jr., a Democrat who is considered a mayoral candidate in 2009, echoed the call to scrap the tax at yesterday’s news conference at City Hall.
“Let it expire, do the right thing for the people of this city,” Thompson said. “What we need to do is ask the governor not to hold this tax on those who can least afford it.”
City officials complained the state tax forces thousands of people to cross the Hudson River into New Jersey to save money, which in turn hurts the city’s economy.
Read the full story here. For our previous post on New Hampshire’s “365-day tax holiday” click here.
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