In an emergency session last Wednesday, the Ithaca Common Council voted to revoke the one and a half percent sales tax on clothing and shoes under $110 , following suit with the rest of Tompkins County which voted to get rid of the tax last year.
“If the state legislature agrees, the tax exemption will take effect Mar. 1,” said Third Ward Representative to the Common Council Patricia Vaughn (D-3rd).
“I think [rescinding the tax] is a step in making it easier for moderate and low-income people to get along,” said Thomas Todd, a member of the Tompkins County Board of Representatives, explaining why he supported the move.
Vaughn disagreed but said the City had very little choice.
“This has substantial budget implications for us, but when the County decided to do it, we had to do it,” she said.
The Ithaca Common Council learned Feb. 6 that the deadline had passed a week earlier to take a vote on whether the City would follow the County in revoking the tax.
Originally, the County had voted not to rescind the tax, but a second vote was taken late last year that reversed that decision. Once the County made its decision, the City had the option of keeping the tax. To do so, however, would have meant an imbalance in prices between Ithaca and the rest of Tompkins County.
“We don’t think it’s a good idea at all, but we couldn’t very well be charging more on the Commons than at the Pyramid Mall,” said Common Council member Ed Hershey (D-5th), director of communication strategies and acting director of public services for the University.
Hershey said that it was especially important for Ithaca not to go against the County’s decision because “the City is sensitive to concerns that it is not business-friendly.”
On the contrary, it is businesses and business development that the Common Council hopes will make up for the sudden loss of revenue.
“Our hope is that the sales tax generated from development will be substantial,” said Vaughn.
Ithaca collects hundreds of thousands of dollars from sales tax on clothes according to Vaughn.
“A lot of clothes are sold in Ithaca, and a huge percentage of them are under $110. That’s every sweatshirt you buy, every pair of jeans you buy,” said Vaughn.
Even those who supported rescinding the tax at the County level agree that the loss of revenue could cause a major problem.
“I can appreciate that the County’s going to have tax problems down the road,” said Todd.
Vaughn worries that those problems may not be so far down the road. She explained that the City’s two ways of collecting taxes are through sales taxes and property taxes. Lowering the sales tax means the City will have to raise the property taxes.
“Less than 50 percent of the property in Ithaca is taxable. Raising the property taxes, therefore, means placing an unreasonable burden on a relatively few homeowners,” she said.
Hershey agreed that the current sales tax is, “not a particularly onerous way of getting revenue.”
Todd, however, feels that due to the unpredictability of the market, it makes more sense to tax property than clothing. “The County does not have a whole lot of control over the sales revenue,” he said.
Archived article by Freda Ready