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UTILITY SERVICES SALES TAX

UTILITY SERVICES SALES TAX. A Proposal by the Mount Vernon City School District March 3, 2010. Utility Services Sales Tax. Section 1212(a) of NYS Tax Law

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UTILITY SERVICES SALES TAX

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  1. UTILITY SERVICES SALES TAX A Proposal by the Mount Vernon City School District March 3, 2010

  2. Utility Services Sales Tax • Section 1212(a) of NYS Tax Law • Applied to natural gas, propane (greater than 100 pounds), electricity, steam, refrigeration, telephone (local), telegraph and telephone answering services. • Does not apply to long distance/international telephone, water, coal, fuel oil, wood or cable services. • Traditional exempted entities – UN/USA/NYS/County/City/ Religious/Charitable/Veterans/Indian Tribes • Applied within the borders of the Mount Vernon, nowhere else • Rate levied can be ½% to 3% in ½% increments – most SCSDs have levied 3%. • Unrestricted funds available for any lawful purpose of the Mount Vernon City School District • Imposed by White Plains, New Rochelle and Peekskill school districts

  3. Desired Benefits • Revenue Diversification A. Viewed Favorably by Rating Agencies – Further Secure/Improve Mount Vernon’s Moody Baa3 Bond Rating • Property Tax Mitigation A. Every dollar collected from utility tax is a dollar less from the levy • Easily Implemented A. Already Leglislatively Enabled B. Public Hearing C. Board Majority Vote D. 90-Day Notice to NYS Tax & Finance Department E. Effective 1st of March, June, September or December

  4. Desired Benefits (continued) • Cost Effectively Administered A. No Collection Expense B. No Collection/Credit Exposure C. No Additional Mount Vernon Personnel Cost D. No Other Local Outlays • Stable/Growing Revenue Source A. Inelastic Demand for Utility Services – demand does not vary much with changes in price B. Annual Revenue Increases Keyed to: 1. Increased Consumption of Utility Services 2. Escalating Utility Costs

  5. Desired Benefits (continued) • From More Community Segments A. Commercial 1. Office Building Tenants 2. Merchants/Shops B. Residential 1. Apartment Building Tenants 2. Condominium Owners 3. Cooperative Unit Owners 4. Single-Family Residences • Ecocentric Tax Encourages and rewards energy conservation – lower utility consumption means less spent on energy costs and taxes applied to utility services

  6. Concerns VII General Aversion to Taxes A. “Another” Tax B. Sales Taxes are Regressive Taxes C. Taking Tax Dollars From Another Pocket of the Same People D. Deductibility IX Estimated Impact A. Estimated impact $1.8 million for 10 months at 3% effective September 1, 2010

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