With all the tax cuts Governor Pataki has proposed in his Fiscal Year 2007 executive budget, it is a wonder that he failed to eliminate the tax that affects the average New Yorker most, the state sales tax on clothing purchases.

Instead of sunsetting the state sales tax on clothing, the governor has called for its extension. Instead of eliminating the most regressive tax in America, the governor has urged its permanency. And instead of providing essential year-round relief for our city’s low- and middle-income families, the governor has proposed merely two sales-tax-free weeks per year.

New York City shoppers currently pay a state sales tax of 4%, along with a .375% Metropolitan Commuter District tax on all clothing purchased. In the FY2006 budget, the City Council did its part to help low- and middle-income families by altogether eliminating the city sales tax on clothing purchases under $110. It is now time for the State to do its part to help New Yorkers provide for their families.

There are several reasons I believe this tax should be permanently abolished. First, the tax puts local New York businesses at a competitive disadvantage. In an effort to avoid paying a tax on clothing, shoppers often flee to New Jersey, which does not have a tax on clothing. As a result, New York City loses some $700 million in sales every year to New Jersey. Second, the sales tax on clothing is highly regressive, because it requires low- and middle-income taxpayers to pay a larger share of their income in tax than the wealthiest taxpayers to buy the same product. Third, in the long run, sales tax holidays leave the regressive tax system basically unchanged. Moreover, seniors are unlikely to benefit much from current sales tax holidays, which target families buying new clothes for school. A complete elimination of the tax would benefit all New Yorkers.

In the past, the city has witnessed the benefits of tax-exempt clothing purchases. During the brief sales tax elimination in 2000, employment in New York City stores that sell apparel increased by over 7,000 jobs. A permanent tax exemption on clothing also brings more consumers to New York City, increasing business in local restaurants, hotels, and cultural venues.

The New York State Legislature cannot allow the governor to continue holding low- and middle-income New Yorkers prisoner to an oppressive sales tax system. I urge the state legislature to oppose the governor’s plan to make the sales tax on clothing purchases under $110 permanent.

Council Member Weprin represents the 23rd District in Queens County. He is also chairman of the City Council Finance Committee.