Relates to the imposition of additional rates of sales and compensating use taxes by Erie county; repealer

Summary of specific provisions

§ 1- Amends clause 4 of subparagraph (i) of the opening paragraph of section 1210 of the Tax Law, which authorizes counties and cities to impose sales and use taxes at specified rates. Clause 4 would authorize Erie County to impose an additional one percent rate and an additional three-quarters of one percent rate of such taxes for the period commencing December 1, 2011, and ending November 30, 2013. Currently the county is authorized to impose these two additional rates through November 30, 2011, the one percent rate pursuant to section 1210 and the three-quarters of one percent rate pursuant to section 1210-D of the Tax Law.

§ 2- Repeals Tax Law section 1210-D, because bill section one moves the authority to impose the additional three-quarters of one percent rate to section 1210.

§ 3- Amends Tax Law section 1224(e) to provide that Erie County has the sole right to impose the additional three-quarters of one percent rate of tax, and that such additional rate is not subject to preemption. These provisions are currently found in section 1210-D. Section 1224(e) also has similar provisions applicable to the additional one percent rate.

§ 4- Amends Tax Law section 1262-q to continue the county's current allocation and distribution scheme for a portion of the net collections from the additional one percent rate. Section 1262-q would also be amended to provide that net collections from the additional three-quarters of one percent rate shall be used by the county solely for county purposes and shall not be subject to any revenue distribution agreement the county entered into under section 1262(c) of the Tax Law. Identical provisions applicable to the additional three-quarters of one percent rate are currently found in section 1210-D.

§ 5- Provides that the bill would take effect immediately, provided that bill section 2 repealing Tax Law section 1210-D would take effect December 1, 2011.

Justification

Erie County has requested authorization to require an additional one percent and three-quarters percent sales and compensating use tax. The revenue anticipated from this additional tax will allow the County of Erie to continue to provide services deemed vital to the community while maintaining a balanced budget.

Existing law

Section 1210 of the Tax Law authorizes counties and cities to impose sales and compensating use taxes generally at a rate not to exceed three percent. More than 50 counties outside New York City and five cities are each authorized to impose an additional rate of tax in excess of three percent. Pursuant to section 1210(a), a county or city can impose the "general" sales and use taxes, consisting of the six subdivisions of section 1105 of the Tax Law, which imposes the State's sales taxes, and of the related compensating use taxes in section 1110 of the Tax Law, which imposes the State's use taxes. Or, pursuant to section 1210(b), a county or city can impose one or more of the taxes described in section 1105(b), (d), (e), or (f), which are known as the "segmented taxes," plus related use taxes. Erie County currently imposes the "general" sales and use taxes at the rate of three percent. The county is also authorized to, and does, impose an additional one percent rate pursuant to section 1210 of the Tax Law for the period December 1, 2009, through November 30, 2011. The county is also authorized to, and does, impose an additional three-quarters of one percent rate pursuant to section 1210-D of the Tax Law for the period December 1, 2009, through November 30, 2011. All of the substantive provisions of section 1210-D, repealed by bill section 2, are incorporated into the relevant portions of sections 1210, 1224(e), and 1262-q of the Tax Law by the other sections of the bill.

Prior legislative history

FISCAL IMPLICATIONS: None to the State. Failure to extend the additional one percent and three-quarters percent sales and compensating use tax rate would mean the annual loss of nearly $250 million in County revenue and would create a severe challenge to the continued operation of County government and its delivery of services.

Effective date

This act shall take effect immediately, provided that section two of this act shall take effect December first, two thousand eleven.