Malliotakis: Hidden Taxes Hurting Small Biz Owners

April 19, 2012 Brooklyn Eagle Staff
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By Paula Katinas

Brooklyn Eagle

Bay Ridge — It’s a good time to celebrate, but while the champagne corks are popping, it’s also important to remember that there’s still a lot left to do to make life more tolerable for New York state’s small business owners.

News for those who live, work and play in Brooklyn and beyond

That was the sentiment expressed by Assemblywoman Nicole Malliotakis, who is keeping a type of scorecard to measure progress.

Joined by Bay Ridge business owners, Malliotakis stood outside one small business, Lola’s Boutique at 8503 Third Ave., Monday morning to discuss the things state government has done in this legislative session to ease the financial burden on mom-and-pop business owners.

But the lawmaker was quick to add that more needs to be done.

“There’s still a long way for us to go in this state,” she said.

New York state used to rank 50th among the 50 states in providing a good business climate. Now, New York is 49th on the list, she said

First, here’s the good news.

Malliotakis listed three of the reasons small business owners have to celebrate: 1. the expiration of the state sales tax on clothing items costing less than $110, 2. the repeal of the Metropolitan Transportation Authority’s (MTA) payroll tax, and 3. the revamping of the state tax code.

The state sales tax on clothing under $110 has expired, meaning that merchants like Mariana Nuziale, owner of Lola’s Boutique, no longer have to charge their customers sales tax.

“It’s refreshing news that I don’t have to charge sales tax on clothing,” Nuziale said.

Malliotakis also pointed to the repeal of the MTA payroll tax as a reason for owners of small businesses to smile. The tax, paid by owners of businesses, provides part of the funding for the transportation agency.

Thanks to a change in state law, owners of businesses with payrolls of $1.5 million or less are exempt from having to pay the tax.

The tax hurt small businesses, according to Malliotakis, who said it discouraged hiring.

“For every job you created, you paid this extra fee,” she said.

Malliotkais testified at a state hearing several months ago to call for the repeal of the tax. A handful of Bay Ridge business owners also testified.

“We were very vocal as a community about that,” she said.

The restructuring of the state’s tax code means more good news, Malliotakis said.

“Businesses will be paying less in taxes in 2012 than they paid in 2011. Local merchants will benefit from it,” she said.

Malliotakis then listed the ways in which the state is failing small business owners. She vowed to change things by introducing bills to improve the business climate.

Malliotakis said she wants to get rid of the Wage Theft Prevention Act, a state law requiring business owners to file lengthy reports with loads of facts and figures. The reports, which are required each year, are costly to compile, Malliotakis said.

She said it irks her because, “This is not something government is required to do, but they require private businesses to do it.”

Malliotakis also plans to go after state taxes hidden in utility bills. One hidden tax on the electric bill goes toward funding the Public Energy Commission. Business owners and residents pay it.

“It’s a regressive fee. It is part of the 30 percent of taxes on your utility bill,” she said.

Another hidden fee, according to Malliotakis, is something called the Interest Adjustment Surcharge. The surcharge came into being because New York state borrowed over $3 billion and is now required to repay that money, plus $100 million in interest, she said.

So the state decided to add on a surcharge to taxes, she said.

“It’s another hit to our small businesses,” Malliotakis said, adding that it cost business owners $95 million in 2011.

“This should be the first thing that should be repealed,” the assemblywoman said.

“Hidden taxes really overburden small business owners,” agreed Bob Howe, president of the Merchants of Third Avenue organization. The merchants group represents hundreds of storeowners on the popular shopping strip.

“Our small merchants are on the defensive the moment they open their doors,” Howe said.

If it’s not taxes and fees, it’s sanitation enforcement agents slapping them with tickets, or health inspectors giving them bad grades for minor infractions, Howe said.

“And at the end of the day, if you made any money, the New York State Department of Taxation is there to collect it,” he said.

Malliotakis said she would continue her fight to get rid of excessive taxes and fees.   

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