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Paterson pulls proposed 'nuisance taxes' off the table due to stimulus funding

By By DAVE DELLECESE

ALBANY, N.Y. (WKTV) - Some taxpayers and businesses can breathe a sigh of relief for the time being, as Governor David Paterson and other state officials announced that they will be eliminating $1.3 billion in tax increases that were in the proposed 2009-2010 State Budget.

The proposed increases sparked outrage very early on from owners of salons, gyms, entertainment venues and more, who would be susceptible to these proposed taxes.

Wednesday's agreement gets rid of what has come to be known as "annoying taxes" or "nuisance taxes." The new taxes included previously tax-free goods and services like clothing priced under $110, sugared drinks, digital downloads, cable and satellite television, haircuts, manicures, movies, live theatre, and more.

Governor Paterson said that the tax increases that are being eliminated were only put forth as a last resort when the deficit ballooned to an unprecedented level.

"Now that enhanced federal funding is available, our highest priority must be to provide targeted relief to those who need it most during this economic crisis - average New Yorkers struggling to make ends meet."

Now why were they able to pull these taxes off the table?

State officials say it's because of enhanced federal funding they are expecting from the stimulus package, which is expected to provide the state with $6.5 billion in relief through the end of 2009 and 2010.

This includes $5 billion in flexible funding through increased Medicaid reimbursements, $1.2 billion that is specifically marked to restore education reductions, and $274 million in other flexible funding.

And state officials say that the use of the rest of the economic recovery aid, along with further agreements concerning tax and fee actions in the the budget will be figured out through continued budget negotiations.

Assemblywoman from the 116th District, RoAnn Destito, who has been opposed to these proposed very early on, was very pleased to hear the news.

"Oneida County already has one of the highest sales taxes in the state and we simply cannot tax our way out of this economic crisis," Assemblywoman Destito said. "In these tough economic times, we need to make life less taxing on the middle class."

And State Senator Joseph Griffo called the elimination of these proposed taxes "a step forward in efforts toward creating a budget that meets the needs of Upstate New York."

“From the start, this budget made a terribly flawed assumption that the average family of four in Upstate New York, would, could, or should pay $3,300 per year through the impact of the Governor’s proposed tax and fee increases,” Griffo said.

Assemblyman David Townsend also sounded pleased, saying:

"“Fat taxes and iTunes surcharges would be funny if the governor and his New York City brain trust weren’t so deadly serious about them when the taxes were introduced in December. The same, too, goes for his new fees on golf, bowling, and other games. High taxes drain income and prevent new business starts – two things disastrous for middle-class families in the midst of an economic recession."

Senator James Seward viewed the step as a start, but with much more work to do.

“Under pressure from an outraged public that he wants to tax everything from haircuts, bowling, ski lift tickets, clothing, satellite and cable TV, grocery store coupons, gym memberships, music downloads, movie tickets -- to name a few -- the governor just backed down on more than $1 billion in proposed taxes. That’s a good start -- but more need to be dropped -- like a higher state gas tax," Senator Seward said. "The governor hasn’t backed down on his plan to raise property taxes by eliminating the STAR tax rebates and cutting the value of the STAR property tax exemption. The rebate checks alone would provide $1.7 billion to middle-class families, a real stimulus plan."

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