Statement From Senator Diaz: My Two Cents In Helping The Governor Solve New York State’s Fiscal Crisis

New York State Governor David Paterson is facing serious fiscal challenges with our State’s next budget, and has some difficult decisions to make regarding this enormous projected deficit. Herewith, I am adding my two cents and sharing my ideas with the Governor.

As usual, no one wants to go after special interest groups to solve these problems. The easiest targets, to no one’s surprise nor concern, are funding cuts for Medicaid, higher education, and social services that will have a disproportionate effect on the lives of poor and less fortunate New Yorkers.

Why do we need to target the poor, Black, and Hispanic communities instead of the special interest groups that have lots of money?

If the Governor really wants to balance the budget and find some money to fill the gaps, I’d like to once again propose the following suggestions. These cuts will not have a serious impact on the basic needs of less fortunate New Yorkers.

1) Untaxed Sales of Cigarettes. Each year New York State foregoes collecting $500 million on tax-free cigarettes sold on Indian reservations. Why can’t the Governor cut that support and impose taxes on those cigarettes? If he does, we will find $500 million and we won’t have to cut health services, college education and hurt the needy.

……

2) Uncollected Taxes. Presently, when people in New York make purchases with credit cards, the credit card companies send the taxes collected and owed to the State back to the merchants, instead of sending the money directly to the State. These merchants are supposed to send the taxes to the State, but for various reasons, many businesses only send an estimate or portion, others send nothing at all, and others declare bankruptcy - - as a result, New York State’s budget loses $500 - $600 million of tax revenue already … collected by credit card companies and owed to the State. Why can’t the Governor force credit card companies to send this money already collected directly to New York State instead of to the merchants? If he does, we will find millions of dollars and we won’t have to cut health services, college education and hurt the needy.

3) Bulk Purchasing of Prescription Drugs. Many food pantries across New York State wisely purchase food at bulk rate saving millions of dollars. Why can’t the Governor propose bulk rate medication purchases for institutions instead of catering to the pharmaceutical companies? If he does, we will find millions of dollars and we won’t have to cut health services, college education and hurt the needy.

4) Tax Surcharge on Wealthy New Yorkers. According to the Working Families Party, if the Governor were to propose a tax surcharge on wealthy New Yorkers who make in excess of $10,000 or more per week, and eliminate corporate loopholes, the State can generate 6 to 7 billion dollars in new tax revenue per year. This will pay for middle-class and working-class tax relief, and keep our transit, school and health systems in decent repair. If he does this, we will find millions of dollars and we won’t have to cut health services, college education and hurt the needy.

The State’s budget needs to be balanced, but not on the backs of the poor. Governor Paterson can take the path of least resistance and find solutions to our fiscal problems by hurting the poor and the needy – many of whom are black and Hispanic – and taking away basic services they need to survive. Or - he can attempt to solve our fiscal problems by having the political courage to go after special interest groups, by going after those who already owe, and by going after those who have more than they need.

STATUS:
S774  DIAZ                   Same as A 9991  Diaz R (MS) 
Tax Law
TITLE....Provides that issuers of debit and credit cards shall pay sales and use taxes directly to the commissioner of taxation and finance  
01/09/07 REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS 
01/09/08 REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS 

SPONSORS MEMO:
                                                                                NEW YORK STATE SENATE
                                                                    INTRODUCER'S MEMORANDUM IN SUPPORT
                                                            submitted in accordance with Senate Rule VI. Sec 1
 
BILL NUMBER: S774
 
SPONSOR: DIAZ   

TITLE OF BILL:
An act to amend the tax law, in relation to requiring issuers of credit cards and debit cards to pay and collect sales and use taxes and pay such taxes to the commissioner of taxation and finance
 
 
PURPOSE:
To enhance the administration and enforcement of sales tax by including credit card issuers along with customers and vendors as those responsible for the remittance of sales tax to the state.
 
 
SUMMARY OF PROVISIONS:
Section 1 of the bill includes issuers of credit cards among the list of those responsible for paying the tax Card issuers who are constitutionally immune from the State sales tax are excluded.
 
Section 2 of the bill provides for a credit or refund to credit and debit card issuers in the event that taxes remitted by them are also remitted by vendors or customers.
 
 
JUSTIFICATION:
A major source of tax evasion occurs when vendors collect sales taxes from their customers, but fail to remit those taxes to the State, By including credit or debit card issuers in the process, the State and local governments are much more likely to collect the tax which has been paid by customers and must be remitted to the Tax Department.
 
 
LEGISLATIVE HISTORY:
This is a new bill.
 
 
EFFECTIVE DATE:
This law shall take effect on the first of October next succeeding the date on which it shall have become a law.