After a five-week standstill in legislation because of political infighting, members of the New York State Senate worked until 2 a.m. Friday passing more than 100 bills including a sales tax increase for New York City.
This story first appeared in the July 13, 2009 issue of WWD. Subscribe Today.
After much debate, senators agreed to raise the sales tax by one-half of a percentage point to 8.875 percent, making it one of the highest rates in the country. It was passed by a measure of 43 to 19.
However, the exemption on clothing purchases for $110 or less remains. That may come as a relief to critics of the sales tax increase who worried it would deter today’s already cash-strapped shoppers from spending.
The Senate was able to get back to business Thursday, after Bronx-based Pedro Espada Jr. returned to the Democratic caucus. He had effectively immobilized the state government by switching camps last month.
In response to news of the sales tax hike, Mayor Michael Bloomberg said he would lift the city’s hiring freeze. The increase was a key part of the $59.4 billion budget he proposed in May that would help generate $1 billion in new taxes and limit additional spending cuts and layoffs.
The increase applies to the city’s portion of the sales tax, which when added to a state tax and transit tax lifts the total rate to 8.875 percent. The city’s portion of the sales tax has only gone up once since 1974, and that was a temporary 0.125 percentage-point increase from 2003 to 2005.