NY Retailers Fret Over Sales Tax

LOS ANGELES — Footwear stores in New York are bracing for another financial blow, thanks to a new plan intended to close the state’s $9.2 billion budget deficit.

The New York State Assembly recently approved a provision that scraps the sales tax exemption on apparel and footwear sold for $110 or less, from Oct. 1 through March 31, 2011. On April 1, 2011, the exemption would resume for one year on products costing $55 or less, then return to full exemption in April 2012. The exemption excuses shoppers from the state’s 4 percent sales tax.

The measure is expected to add $330 million to state coffers, and the senate will address the issue when it meets on July 12.

But local footwear retailers — particularly those in New York City and close to state borders — worry that consumers will travel elsewhere for a better deal.

“We already lose a great deal of customers to New Jersey,” said John Lee, manager of Atmos NYC. “Many of the shoppers who have the money to spend are [already] going over the New York bridges. Stores might have to take the hit themselves and absorb the tax, which will reduce our margins even more.”

Similarly, Chuck Schuyler, president of the National Shoe Retailers Association, said that while the tax would not change the competitive landscape between footwear brands, it certainly wouldn’t encourage purchases. “Any increase like this doesn’t add to the value of the product, so it’s not a positive,” he said. “Four percent is an awful lot of money.”

David Zaken, owner of the David Z stores, said given the state’s fiscal problems, higher taxes were unavoidable. “Taxes are only going to go up,” he said. “And of course it’s going to affect the business. [The tax increase] is substantial. It’s going to take time to adjust.”

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