NY Business Leaders Support Reinstatement Of Commuter Tax

by Leroy Baker, Tax-News.com, New York

10 April 2003

New York State Governor George E. Pataki this week asked an influential group of business leaders to delay publishing an open letter calling for the reinstatement of the New York commuter tax.

The Governor is known to be strongly opposed to the tax, and has asked for more time to come up with alternative solutions to the city of New York's $3.4 billion fiscal deficit.

The letter has been drafted by members of the business association known as the Partnership for New York City, and is thought to have been signed by dozens of its members. It calls for a restoration of the old commuter tax rate of 1% of an individual's income, a law which was repealed in 1999. "We don't think it will cause great hardship or lead to significant job losses," stated the letter, continuing: "As employers we represent most of those commuters who will be affected by this tax."

Mayor Michael Bloomberg meanwhile, also supports the commuter tax, although at the higher level of 2.7%, the same rate paid by city dwellers. The Mayor has said that the reinstatement of the tax at the pre-1999 rate would not produce enough revenue to balance the budget. Bloomberg's preferred tax rate would raise an estimated $1 billion.

The letter also urged Pataki to reconsider plans to dramatically cut state grants to schools by $1.2 billion, which it said would jeopardize the Partnership's push for school reforms.

The Partnership is thought to be divided on the commuter tax issue, and many executives chose not to sign the petition, according to reports. This week also saw a demonstration by elected representatives from Westchester county and Long Island who claimed they had 15,000 letters from suburban residents who opposed the plan.

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