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April 12, 2006

Hevesi: New York's sales taxes are among the nation's highest

New York's combined state and local sales tax rates range from 7 percent to 9.5 percent, among the highest rates in the nation, Comptroller Alan Hevesi's office found in a new report on local government sales tax.

"Sales tax rates in New York State are much higher than the national average," Hevesi said. "Because sales tax revenues are tied to the economic health in a specific area, the fact that many governments are becoming more dependent on sales taxes to pay for their daily operations makes them more vulnerable if they face an economic downturn."

The report pointed out the New York's above-average sales tax contributes to the state's high overall tax burden.

"Among the 50 states, New York ranks first in local taxes, fifth in local property taxes and third in local sales taxes," the report said. "Although the combined state-local sales tax rate varies considerably among counties in New York, it averages 8.25 percent, compared to a national average rate of 5.93 percent."

Only Washington, Tennessee, Louisiana and Washington have higher average combined state and local sales tax rates than New York, the report said.

The report also found that 85 percent of New Yorkers live in municipalities where the combined sales tax is 8 percent or higher.

And while sales tax revenue increased as a percentage of total county revenues from 20.4 percent in 1994 to 25.6 percent in 2004, the growth varied widely by location.

"From 1999 to 2005, sales tax collections grew almost three times faster in the Hudson Valley than in the Finger Lakes or the Capital District," the report said.

The report also said that while state law permits counties a local tax rate of 3 percent, 49 of the state's counties have petitioned Albany for permission to raise the county share above the 3 percent limit.

"Although the rates in excess of 3 percent are often referred to as "temporary" taxes, in many cases these rates have been in effect for decades," the report said. "Several downstate counties and the city are also subject to a 0.375 percent sales tax dedicated to the Metropolitan Transportation Authority."

The report, which includes a list of sales tax by county and city, is available at www.osc.state.ny.us/press/releases/apr06/041106.htm.