Cities, States Float Sales Tax Ideas

Taxpayers around the country are facing a mixed bag of state and local sales tax proposals.

New York Governor George E. Pataki, for one, is proposing tax breaks and rebates amounting to billions of dollars, but when it comes to sales taxes, he is calling for at least one increase, the New York Times reported.

State cigarette taxes outside New York City would go up to $2.50 from $1.50 per pack. The governor also decided to continue charging sales taxes on clothing sales of less than $110. A tax break had been scheduled to come back into effect, but it was stopped in favor of a much less generous plan. The governor will allow two weeks with no sales tax-one of them a back-to-school week-on clothing purchases of less than $250.

In Utah, lawmakers are discussing eliminating the sales tax on food because the current fiscal year tax revenues are coming in $231 million over budget, the Deseret News reported.

"We've all decided we'll have a tax cut next year," bill sponsor Rep. Merlynn Newbold told the newspaper. Completely removing the sales tax from unprepared food, which she called “the morally right thing to do,” should be enacted because, for the first time, revenues will allow it.

In New Hampshire, a sales tax is proposed that was designed to protect the quantity and quality of state water supplies. The tax would affect beverages sold for resale in the state, to be paid by the product manufacturers and distributors. The tax would be 2 cents on containers up to, and including one gallon, and 5 cents for a container over one gallon, the Portmouth Herald reported. The bill calls for 30 percent of collected revenues to be earmarked for the Land and Community Heritage Program, 10 percent for dam maintenance, 10 percent for water resources and supply protection programs, and 10 percent to the state's rivers management and protection programs. The rest would go to the general fund.

Another example: Voters in the city of Rockford, Illinois, will vote, in March, on a sale-tax increase to fund capital projects, the first such vote in 20 years. If approved, purchases made in the city will go up 1 percentage point to 8.25 percent. The idea is to shift the financial burden of capital improvements, from property owners to everyone who buys something, other than food, medicine and titled vehicles in the city, City Administrator Jim Ryan told the Rockford Register Star.

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