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For Release — February 27, 2009

The Business Council: Stimulus aid must be used to eliminate proposed tax increases

ALBANY, N.Y.—“With $26 billion in new federal stimulus money coming into New York, the $4 billion in new taxes proposed in the Executive Budget can and must disappear,” said Kenneth Adams, president & CEO of The Business Council of New York State, Inc.

“The elimination of $651 million dollars in so-called 18-A assessments on utilities and telecommunications providers should be a priority. This huge increase will drive up what people pay for energy and telephone services,” said Adams.

These 18-A assessments were originally intended to fund the state's Public Service Commission (PSC) and the Department of Public Service (DPS) which regulate utilities. But, the Executive Budget proposal increases these assessments by more than 500 percent to fund activities that have nothing to do with utility regulation.

“With New York's energy prices already 60 percent higher than the national average for residential customers, New Yorkers cannot afford another tax,” said Adams.

When this new tax is applied to telecommunications companies that are regulated by the PSC it will put them at a significant competitive disadvantage to non-regulated providers. These companies and their customers could also be hit by a proposal in the Executive Budget to allow municipalities to extend their utility gross receipts taxes to wireless telecommunications companies.

“With affordable health care a serious concern for New York employers and individuals the $800 million in health insurance taxes that will drive up the cost of health insurance coverage should be removed from the budget and the stimulus aid makes that possible,” said Adams.

“Nearly $400 million in additional assessments on other insurers will damage the life insurance and property-casualty insurance industries and their customers,” added Adams.

New York's domestic life insurers would be hard hit by this particular tax. This is an industry that maintains headquarters in New York City, Binghamton, Syracuse and Albany and directly employs more than 30,000 New Yorkers.

The Executive Budget also proposes many sales tax increases. Since business pays about 40 percent of the sales tax levy in the state these are of particular concern to The Business Council. Among the most damaging is a $550 million proposal to extend sales taxes to both residential and business customers of cable and satellite television services.

“With businesses and individuals struggling to make it through the recession, in a state with tax burdens that are already unreasonably high, it is simply the wrong time to saddle New York's economy with $4 billion in tax increases. Now is the time for the legislature to use the stimulus wisely and remove these taxes from the budget,” concluded Adams.