New state budget hits businesses in several ways

In addition to hiking taxes on clothing and cigarettes, the New York State budget raises revenues in other ways that impact local business.

The state will delay business-related tax credits for three years. It will also repeal a credit for vendors who file sales taxes monthly, and ensure that online hotel room resellers are taxed.

Dan Perkins, vice president for government affairs for the Long Island Association, said, "Overall, the budget's a bit of a disappointment. It's clearly time for government to understand that they've got to cut expenses."

Gov. David A. Paterson, however, cited spending cuts for filling the budget gap. He was not successful in pushing through his proposed tax on soda and other sugary beverages.

Also, an initiative to allow grocery stores to sell wine did not pass, which disappointed some Long Islanders.

Perkins said the LIA supported selling wine in grocery stores because "it made it more accessible to the public. It was something that could benefit the wineries on Long Island, to reach a wider audience for their products."

More than half a billion dollars is expected to be raised by reinstating a state sales tax on clothing and shoes in October, and from the $1.60-a-pack increase in cigarette taxes imposed last month, state budget officials said.

Kathy Odessa, executive director of the Long Island Gasoline Retailers Association, criticized the tobacco tax increase. "This is going to cause further bootlegging and people going out to these Indian reservations," she said.

The deferral of business tax credits, for personal and corporate income taxpayers, is estimated to increase tax receipts by $100 million for the first year.

The delay involves tax credits of more than $2 million. The state would begin to repay the additional amount due beginning in 2013 for three years.

Mike Elmendorf, New York State director of the National Federation of Independent Business, called that deferral "a tax increase. When your tax liability goes up, that's a tax increase. That's the wrong thing to do to employers." He said the state was reneging on its commitment to provide tax credits.