Byline: Eric Wilson

NEW YORK — The New York State Senate is expected to vote next week on a package that includes a phased-out repeal of its 4 percent levy on apparel costing less than $500.
This follows a “program of tax reformation,” a bill that was approved by the State Assembly Wednesday that includes a repeal of tax on apparel that would occur all at once, effective March 1, 1998.
The two tax repeal bills are part of spending and taxation reform bills proposed by each house in prelude to committee budget negotiations. A legislative source said Thursday that the tax repeal bills will likely go into committee, where members of both houses will hammer out the differences between their plans if the Senate’s version is approved next week.
Both plans include tax reductions and spending issues beyond the apparel tax. An overall tax resolution would have to be reached between the Assembly and Senate for the state’s 4 percent tax on apparel to be repealed.
Senate and Assembly aides familiar with the process said the apparel tax repeal issue is not likely to be a stumbling block in reaching a budget agreement. The state requires a budget to be passed every year by April 1, although that hasn’t occurred in the past 13 years.
The Assembly tax reformation proposal would permanently eliminate the tax in 1998, according to a spokeswoman for Assembly Speaker Sheldon Silver.
The Senate’s version proposed in March by Senate Republican Majority Leader Joseph L. Bruno includes two tax-exemption weeks — Aug. 23-29, 1997 and Jan. 17-23, 1998 — followed by a phaseout of the tax on clothing by 1 percent per year. It would be fully implemented in New York State fiscal year 2001-02.
As reported, the Senate proposed a gradual tax repeal to spare the expense of implementing the tax cut and the immediate effect of a loss of revenue on the budget. Both versions would allow localities the option of dropping all or part of their sales tax on clothing and footwear costing less than $500.
Last year, the state budget included a week-long experiment to prove the merits of the tax abatement concept at the speaker’s insistence. The week of no sales tax on apparel, which took place Jan. 18-24, received good reviews from most merchants.
Both plans attribute the ability to repeal the tax — which would cost the state $550 million in lost revenues, according to Bruno’s office — to windfalls related to gains on Wall Street that have boosted state coffers by more than $1.7 billion.
Tax on apparel varies in localities throughout the state. On top of the state’s 4 percent, New York City has a 4 percent tax and a .25 percent Metropolitan Transportation Authority tax on apparel.
State and local politicians, including New York mayor Rudolph Giuliani, have been encouraging a repeal of the sales tax on apparel since the week-long tax abatement experiment boosted sales figures.

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