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Post date: July 1 1999

Spitzer To Connecticut: Play Fair On Tax Rebate Program

Attorney General Spitzer today announced his intention to file a lawsuit on behalf of thousands of New Yorkers who paid sales tax in the State of Connecticut but who have been prevented from participating in that state's sales tax rebate program.

The move follows a Connecticut lawsuit that last week resulted in a court decision declaring invalid New York City's commuter tax on out-of-state residents.

"If the courts have decided that the Constitution requires that there can be no inequities in taxation, then this principle must apply across the board," Spitzer said. "The Connecticut sales tax rebate program clearly should apply to all those who paid the sales tax, including thousands of New Yorkers who work in the state of Connecticut and shop there."

"We are not attempting to strike down the rebate program. Nor are we claiming that citizens of New York ought not to pay their share of applicable Connecticut taxes. We simply are seeking what the Constitution requires -- equal treatment under the law."

New Yorkers who cross the border into Connecticut to make purchases of goods and services must pay that state's 6 percent sales tax. Earlier this year, the Connecticut Legislature approved a special program providing a sales tax rebate of approximately $50 per person. The program applies only to Connecticut residents, despite the fact that non-residents pay millions of dollars in sales tax.

Spitzer said the effect of the rebate program was to make New Yorkers and other non-residents pay more for the same goods and services than Connecticut residents. Such a program "offends the Constitution by interfering with guaranteed privileges and immunities," said Spitzer, using language virtually identical to that of Connecticut officials in the commuter tax case.

State Supreme Court Justice Barry Cozier ruled last week in favor of Connecticut that New York's commuter tax repeal was unconstitutional because it discriminated against out-of-state commuters. That decision is being appealed.

In defending the commuter tax law, Spitzer submitted evidence that New York residents pay a significantly higher proportion of New York City service costs than out-of-staters. The partial repeal of the commuter tax was an effort to reduce, but not eliminate that inequity.

In the new lawsuit, the Attorney General cites the fact that New Yorkers contribute a significant portion of Connecticut sales tax revenues, but have been unfairly excluded from participation in the rebate program.