Purpose

NOTICE OF PUBLIC ROUNDTABLE
ALBANY

Subject: Enhancing New York State’s fiscal stability through a more rational and streamlined sales tax system.

The sales and use tax is New York State’s second-largest tax revenue source, accounting for almost 19 percent of all state tax receipts in the 2007-2008 fiscal year. Despite its importance, the sales tax remains riddled with irregular and anachronistic rules that both narrow the size of state and local governments’ tax bases and expose them to high levels of financial volatility. The recent recession has exposed the volatility of the sales tax system and how it threatens the ability of state and local governments to provide and maintain important services. In recent years, New York City and states such as Maine, New Jersey and Arkansas have modernized their sales tax systems by expanding their sales tax bases to incorporate the growing service-based economy. At the same time, several other states have established more simplified sales tax systems through initiatives such as the Streamlined Sales and Use Tax Agreement, a collaborative project of the National Governors’ Association and the National Conference of State Legislatures. With this public roundtable, the Select Committee on Budget and Tax Reform will explore the need for a more rational and streamlined sales tax system and the challenges state and local governments may face in creating it.

Roundtable discussions should relate to proposals to enhance or modernize New York’s sales tax system. Some questions that will be raised at the roundtable include:

• What would be the impacts on state and local governments and consumers, in terms of financial volatility and progressivity, if the State and counties broadened their sales tax bases to more generally include services?
• How would more streamlined sales tax rules, such as those outlined in the Streamlined Sales and Use Tax Agreement, improve state and local sales tax collections, particularly those relating to sales over the Internet? What challenges would the State and counties face in adopting such a system?
• Would the expansion of New York’s excise tax base be more progressive or regressive than an expansion of its sales tax base?
• Are there any sales tax exemptions that should be eliminated to strengthen the sales tax base and improve progressivity and equality?