JA urges members to fight luxury-tax initiatives

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JA urges members to fight luxury-tax initiatives

February 20, 2009

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New York--Concerned about proposed legislation in New York and Illinois to enact luxury taxes on jewelry and watches, Jewelers of America (JA) is asking retail jewelers to join its letter-writing and fund-raising campaign to fight back.

In the state of New York, the luxury-tax measure is currently part of the state's larger budget bill, meaning that if the budget passes with the item included, the luxury tax would go into effect as part of it. Meanwhile, in the state of Illinois, lawmakers have drafted a specific piece of legislation to create a luxury tax.

Both bills would add a 5 percent luxury tax to all jewelry and watch purchases that exceed $20,000, according to JA.

In a release issued on Friday, JA President and Chief Executive Officer Matthew Runci pointed out that previous efforts to enact a nationwide luxury tax floundered.

"Studies of the last national luxury tax, which was repealed in 1993, proved that it raised virtually no revenue because it was so complex to administer," Runci said in a media release. "In addition, reduced sales caused by the luxury tax precipitated layoffs in affected industries, which increased unemployment costs."

Runci also noted that studies of past luxury taxes show that they've dampened demand for jewelry and watches overall because many confused consumers believed that all jewelry and watches--even those that fall below the "luxury" price level--were subject to the luxury tax.

"At a time when the jewelry and watch industries are facing severe challenges due to the worldwide economic slowdown, the last thing we need is a discriminatory tax that penalizes businesses and workers only in certain industries," Runci said.

JA recently partnered with the American Watch Association (AWA) to hire a lobbyist to go to the New York State capital, which is in Albany, to oppose the proposed luxury tax there. JA and the AWA have also written to their members, enclosing sample letter-petitions and the addresses of New York State legislators. The associations have also urged members to ask their employees to sign letter-petitions to underline the effect that a luxury tax could have on workers in the jewelry and watch industries.

To address the issue in Illinois, JA is urging its member stores to join a letter-petition campaign directed to state lawmakers there.

To fund lobbying efforts, JA has asked leading retailers, jewelry and gem suppliers, watch companies and associations to contribute to a Stop Luxury Taxes fund, which would be used to engage local advocates in state capitals where luxury bills are introduced. These advocates will monitor legislation and speak out on behalf of the jewelry and watch industries. Contributors will be kept apprised of efforts made, monies spent and progress on all legislation.

In a letter to potential contributors, Runci wrote, "In this period of acute fiscal distress for many state governments, there is every reason to believe that other states may entertain similar luxury tax measures [as New York and Illinois], thus we must act urgently and purposefully to oppose such measures."

To obtain the sample New York or Illinois luxury-tax letter-petitions and key legislators' contact information in either state, industry members should contact JA's public affairs department: Peggy Jo Donahue, director, pjdonahue@jewelers.org, (646) 658-5802; or Susan Thea Posnock, manager, sposnock@jewelers.org, (646) 658-5806.

To contribute to the Stop Luxury Taxes fund, e-mail JA via Sharie Fogarty, assistant to the president and CEO, sfogarty@jewelers.org.

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