Rudy: Shed Half Of Clothes Tax By MIKE CLAFFEY and MICHAEL O. ALLEN, Daily News Staff Writers

January 12, 1997

Mayor Giuliani yesterday revived his call for 2-cent cut in the city sales tax on clothing buys — and vowed to press for approval even if the state doesn’t match the reduction.

In an election year bid aimed at city shoppers and stores, Giuliani said he will include plans to halve the city’s 4-cent share of the 8.25% levy in the State of the City address he will deliver on Tuesday.

The reduction, which requires state Legislature approval, would apply to all clothing purchases under $500.

Unlike last year, when the mayor scrapped a similar plan because Albany leaders balked at halving the state’s 4-cent share, Giuliani said he will seek state Legislature approval for a unilateral cut.

“The proposal we’re going to make to them is: I’m willing to cut the New York City sales tax in half, no matter what they do. I can’t see how they can deny us the opportunity to do that,” Giuliani said.

“I believe that there is a very good chance that we will, by Dec. 1, be able to cut our sales tax in half,” added Giuliani, who predicted the plan would stem the flow of shoppers to New Jersey and other localities with no or low sales tax on clothing.

Many shoppers and storeowners cheered Giuliani’s plan — even as it remained unclear whether the projected economic benefit would outweigh the loss of city sales tax income and expand city budget gaps.

“I absolutely think it would help,” said Nancy Ponce, manager of a Conway discount clothing store in Manhattan. “If you buy one item, it’s not really that much. But if you spend a lot of money, it adds up.”

Deborah Morton, a baker from Brooklyn, said “anything is better than nothing.”

The announcement was the latest in escalating calls for tax cuts as the city and state reap higher revenues generated by Wall Street’s bull market. City Council Speaker Peter Vallone (D-Queens) proposed cutting the sales tax on household goods like soap, toothpaste and diapers.

A spokeswoman for Gov. Pataki, who yesterday unveiled his own $3.4 billion proposal to cut property taxes and boost school aid, said the governor would would study Giuliani’s plan carefully. “The governor is always interested in reducing taxes,” said spokeswoman Eileen Long.

Assembly Speaker Sheldon Silver (D-Manhattan) issued similar signals of approval.

Giuliani estimated the plan would cost the city $70 million in lost sales tax revenue during the 1997-98 city fiscal year and $150 million the following year. Despite new projections of a $500 million surplus by July, the city still faces an estimated $2 billion deficit for next fiscal year.

But the mayor predicted the sales tax cut would more than pay for itself.

Original Story Date: 01/12/97