Tax-free week is back in New York

n But Orange County does not drop local tax By Mark Johnson SARATOGA SPRINGS — Out with her two young children last Friday, 32-year-old Michelle Mercier was doing some shopping for the upcoming school year. But she wasn't buying everything she needed, choosing instead to wait for this week, when tax-free shopping came back to New York state. All purchases on clothing and shoes of under $110 are tax free through Monday, Sept. 5. The exemption applies to the state's four percent sales and use taxes. Many local governments also choose to eliminate their sales taxes the same week in an attempt to boost business for retailers and make some points with the public. Last January, New York shoppers saved $37.2 million during a sales tax-free week. Consumers saved $49.2 million in sales tax during the tax-free week a year ago, according to state officials. "I'm a teacher, so I need back-to-school clothes as well," said Mercier, whose daughter Olivia is set to enter preschool. "Whenever tax-free week comes up, I see what I can get." New York's relationship with the tax break began in 1997 with temporary exemptions first on clothing and then on clothing and shoes as well as from items costing less than $110 to those cheaper than $500. There was then a permanent exemption starting in March 2000, but that was suspended in about two years. Adding to consumers' confusion, local counties debated whether to also drop the local sales tax and most eventually did, if only to avoid a competitive disadvantage with neighboring counties. This year just five of 62 counties — Lewis, Nassau, Orange, Putnam, Westchester — opted not to drop their local tax during this coming tax-free week. Fulton in Oswego County, Utica in Oneida County, and Mount Vernon, New Rochelle, White Plains and Yonkers in Westchester County also decided not to give up the tax, said Rebecca Marion, a spokeswoman for the Retail Council of New York. There was even more muddlement last year because retailers didn't know until late June if there would be another week without a state sales tax because of a late budget. "There weren't any problems this year," Marion said. "The state passed the budget on time so we had an indication of what was going to happen." Still, some merchants had to rely on letters from the state Tax Department sent out at beginning of August alerting them to the tax-free week. Although there is still no study detailing the measure's commercial benefit, Marion said many retailers report a boost in business during the tariff-free time. "Anecdotally, I've had owners call to ask when next the tax holiday is," she said. "They've told me `I really get a lot of business as a result of it."' She said other merchants who don't sell clothing or footwear also report increased foot traffic in their stores because people happen to be out shopping. Consumer confidence dipped in early August, the second straight monthly decline, as people were anxious about the economy's prospects and their own in the months ahead. The RBC CASH Index, based on polling by Ipsos, showed that consumer confidence fell to 72.6, compared with 73.9 in July. A year ago, consumer confidence was a buoyant 104.8.