As the Pataki/McCall State Commission charged with recommending a tax plan upon which Gov. Andrew M. Cuomo intends to build his next state budget plan completes its work, a thorough examination of state tax collection processes and procedures should be included.
The commission does not need to look much further than the debacle over the ever-growing costs of processing paper income tax forms filed during the last tax year. Last week it was revealed that in excess of $5 million has been paid in overtime to state employees assigned to cleaning up the mess created by a private contractor.
It is incumbent on the commission to look for additional revenues from uncollected taxes and savings by driving inefficiencies out of the tax collection system. In Jefferson and St. Lawrence counties, for example, the collection of bed taxes imposed on motel and hotel rooms is essentially left to the honor system. Motel operators make payments and no one audits them, leaving government in the dark about how much was collected from the guests who paid the tax when checking out of the hotel.
In the spirits industry, complaints are surfacing that liquor and wine wholesalers from other states are finding fertile markets in New York, making it difficult for the state to collect all the revenue due. Out-of-state liquor and wine wholesalers may be able to take advantage of the difference of laws between New York and New Jersey to evade about $100 million in taxes. And none of those savings are passed on to purchasers; the benefits accrue only to the out-of-state wholesaler.
The Pataki/McCall Commission should take a look at how the disintermediation created by differing laws in New York and New Jersey is costing New York state millions of tax dollars. And they should include recommendations on how to streamline tax collection procedures so that the state and local governments receive the revenues the law entitles them to and that all taxpayers are treated equally.