January 30, 2004

Tompkins Drops Sales Tax

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Shoppers this week can celebrate the fact that both New York State and Tompkins County are withholding sales tax on clothing and footwear sales on purchases under $110. These items will be exempt from state sales tax of 4.25 percent and 4 percent in Tompkins County from Jan. 26 through Sunday.

According to David Squires, Tompkins County finance director, there have been two annual exemption weeks in each of the past three years. The exemption weeks — in January and September — are intended to correspond with the back-to-school seasons.

In addition, “Pennsylvania doesn’t have sales tax on clothing, [and] neither does New Jersey, so it’s a way to counteract some of the [competition from neighboring states],” said Jim Tull, general manager of the Pyramid Mall.

The resulting reduction in sales tax income for Tompkins County, however, has not been significant. Since the tax calculations from each week are assessed on a quarterly basis, “we haven’t noticed a reduction,” Squires said.

He added that the County takes in an average of $36 million in sales tax annually, and one week’s loss of $20,000 is relatively negligible.

The insignificance of the loss in sales tax income may be attributed to the fact that “in Tompkins County, sales tax on clothing is a lower percentage of retail sales than in other places,” Squires said.

In comparison to surrounding counties, Tompkins County offers relatively few shopping malls and outlets. While the state sales tax exemption applies to nearly every community, counties such as Cayuga County, where the Finger Lakes Outlet Mall is located, are still charging the 4.25 percent tax this week.

While sales tax from clothing and footwear does not contribute much to the county budget, it is still a necessary form of income. From March 2002 to March 2003, the county exempted clothing from sales tax, but “reinstated it for budgetary reasons at the state and local level,” Tull said.

The Pyramid Mall, however, was undergoing expansion with the addition of new stores, such as Borders, Target and Best Buy, during the sales tax transition. As a result, “the impact of the new stores more than overshadowed any negative impact of the sales tax,”Tull said.

The savings from the sales tax exemption has also been overlooked by some shoppers.

“The amount you save is basically negligible so I didn’t really take it into account when I went shopping this week,” said Aurora Kiviat ’06.

Based on past years’ experience, stores throughout Ithaca look forward to their increased sales during the two annual weeks of sales tax exemption.

“It benefits both the customers and the store,” said Nicole Warwick, manager of Pookie and Sebastian.

Although the weather this week has deterred some customers, “traditionally [sales tax exemption has] been well received and we see a lot more traffic,” Tull said.

At Pookie and Sebastian, the exemption was advertised with a sign on the door to alert customers. The store also brought its spring merchandise out in time so that customers could receive the benefit of avoiding sales tax.

Fontanas similarly noted the sales tax exemption in their advertisements this week.

“Normally it does give us a pretty significant increase in our business,” said Shawn Manning, store manager of Fontanas. “This past fall when it happened, it was a pretty good week and it gives the economy a boost.”

Archived article by Diana Lo