Clothing fills the racks and covers the tables at Elizabeth Boutique.
The shop, a fixture of the Arlington Business District, has thrived since 2008, selling fashionable women’s clothing. But shoppers are willing to travel, and local business owners often need to compete with more than just regional shops.
“I think people go to Jersey for no tax [on clothing],” said Beth Madsen, owner of Elizabeth Boutique. “I think having no tax on clothes keeps people spending the money.”
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But a measure set to be presented to the Dutchess County Legislature could be a boon some local clothing shop owners say, all while saving money for shoppers.
County Executive Marc Molinaro will present a resolution to enact a sales tax exemption for clothing and footwear items under $110 each. The resolution will be presented on Oct. 27, and if approved, the exemption would take effect in March.
For Madsen, the exemption would be an opportunity to attract shoppers at a time when online sales are increasingly gaining steam.
“It would be a selling factor to me, for my customers to know that they were getting a savings,” Madsen said. “It’s definitely something I would promote, so people knew they were saving money.”
Sales tax exemption for clothing and shoes
Sales tax in Dutchess County is 8.125%, with 4% going to the state, 4% to the county and 0.125% to the Metropolitan Commuter Transportation District.
As of March 2020, clothing and footwear items under $110 were exempt from sales tax across the state. Should the resolution pass, these items would be exempt from the remaining 4.125%
Molinaro said the decision to implement these tax exemptions stems from the county’s stable financial position. It will be implemented without any negative impact to programs or service reductions, he said.
“As a result, we continue to offer tax relief to our residents, and this exemption on clothing and footwear highlights our ongoing efforts to cut residents’ taxes and keep those dollars in their pocket,” he said.
County Legislature Chairman Gregg Pulver said the exemption would benefit local shoppers.
“Dutchess County residents work hard for their money, and they deserve to keep as much as possible,” the northern Dutchess Republican said
The county anticipates the exemption will save taxpayers nearly $12 million in 2022 and about $14 million annually.
While that’s a benefit to shoppers, it’s a small percentage of the total amount of sales tax in the county each year. At $205 million, sales tax accounted for roughly 40.9% of the county’s projected revenue in its 2021 budget.
Benefits to local shop owners
Barbara Schreiber, owner at Rhinebeck Department Store, said sales tax can be a sticking point for some shoppers visiting from other states.
“When people come from other states, they sometimes challenge us and say, ‘Well, why are you charging us sales tax?” she said.
After eligible clothing and shoes were exempted from the state’s share of sales tax in 2020, Schreiber said she adjusted the prices of her stock that were right on the line to offer customers’ savings.
“Obviously, the less taxes anybody has to pay in any situation is always a benefit to the consumer,” she said.
Her only concern is the possibility that the region could see an increase in other taxes down the line to balance out the exemption.
“I certainly don’t want my town taxes in my county taxes to go up to compensate for it,” she said.
At Elizabeth Boutique, Madsen said customers have displayed a greater appreciation for their local stores, and an opportunity to save could mean more people come out to shop.
“With everything between COVID and the shutdown, I think savings is important to everybody, and I think shopping local is more important than it was before,” she said.
Geoffrey Wilson: [email protected]; 845-437-4882; Twitter: @GeoffWilson_