LI businesses welcome MTA tax reprieve

Long Island small-business owners and their advocates say this week's court ruling calling the MTA payroll tax unconstitutional is a moral victory.

"We hope it's the end of the line," Bruce Carlow, co-owner of Trio Hardware in Plainview, said Thursday. "We feel it is unfair for us on Long Island, paying this MTA tax, especially because none of our employees use it [MTA services]."

Trio Hardware and other businesses in the 12-county MTA region were required to pay the tax, which was enacted by the state in 2009 during the Great Recession. Last December, a law was passed eliminating the tax for 289,000 small businesses, including Trio, and reducing it for another 6,000 businesses. But for many, what they saw as the basic unfairness of the tax still rankled.

Wednesday's state Supreme Court decision gave them hope that its demise was near. State Supreme Court Justice R. Bruce Cozzens Jr. said the special tax required either passage with two-thirds of the vote in both houses of the State Legislature or home-rule messages from the municipalities.

"We thought it was bad as public policy, and we thought it was illegal," said E. Christopher Murray, president of the Nassau Council of Chambers of Commerce, which lobbied for repeal of the tax.

The court's decision "cuts it off from ever coming back, so we are very happy with it," he said.

The tax was imposed when many small businesses were hit hard by the recession and Long Island's unemployment rate was beginning its ascent. Those opposing the tax said they were also angered by what they saw as the MTA's bloated, inefficient bureaucracy.

"It was in the heat of the recession, and the idea of placing a tax on payroll was kind of dumbfounding," Murray said.

Small businesses were up in arms at the time, said Julie Marchesella, first vice president of the Nassau Council of Chambers of Commerce and owner of Merrick's Queen of Hearts, a plus-size formalwear store.

"Economically it was difficult for us," Marchesella said. "That might have been the thing that put small business owners out of business."

The Metropolitan Transportation Authority has said it intends to appeal the ruling. So taxpayers who have been paying the payroll tax should continue to pay the tax and file returns until further notice from the state Department of Taxation and Finance, the department said.