ALBANY, N.Y. — Called a “major victory” for all New York City residents, legislation to exempt sales tax on apparel and footwear in New York City has been signed into law by Governor Eliot Spitzer.
“Eliminating the sales tax on clothing and footwear in New York City has far reaching benefits,” said Senate Majority Leader Joseph L. Bruno (R/Rensselaer). “As a result, small businesses will see an increase in business and revenue, and consumer spending will increase, leading to a more vibrant economy. [This bill is] a major victory for the pocket books of all New Yorkers.”
The law is set will take effect Oct. 1, 2007.
“The repeal of the tax will save taxpayers $110 million in 2008; $117 million in 2009; $119 million in 2010; and $122 million in 2011,” said Spitzer.
In the City of New York, under existing law, apparel and footwear costing less than $110 per article of clothing or a pair of shoes is exempt from sales and compensating use taxes, and is set to expire on July 1, 2008. This bill will expand the exemption to cover all apparel and footwear on and after July 1, 2008.
“On Sept. 1, 2005, New York City restored the sales tax exemption on clothing and footwear purchases costing under $110,” said Spitzer. “However, New York City’s 4 percent sales tax still applies to clothing and footwear purchases costing $110 and above. By repealing the tax on all clothing and footwear, New York City will be better able to encourage the city’s visitors and residents to make their purchases within the city.”
“Because clothing and footwear purchases are exempt from sales tax in New Jersey, repealing the tax in New York City will increase the city’s economic competitiveness within the region,” said Senator Frank Padavan (R/Queens), a co-sponsor. “In addition to removing the incentive for city residents to make their purchases in neighboring states, the repeal of the tax will encourage the city’s visitors to purchase more clothing and footwear.”
“In 2006, 44 million visitors traveled to New York City, and 84 percent of those visitors were international tourists,” explained Assemblyman Herman D. Farrell (D/New York). “The repeal of this tax will enhance the City’s attractiveness as a tourist destination, particularly to individuals from outside the United States who wish to take advantage of the current exchange rates. Eliminating the city’s portion of the sales tax will encourage consumer spending, which will help to stimulate economic activity and create and preserve jobs in New York.”