I have blogged about this before - oddities of state sales tax rule definitions of what is taxable and what is not. For example, certain "toasted sandwiches" in California are taxable (3/10/10 post). On April 13, 2011, the New York Dept. of Taxation and Finance issued Tax Bulletin ST-835 that defines "sandwich" - a taxable item in New York.
In case you are wondering, per the State of New York ...
"Sandwiches include cold and hot sandwiches of every kind that are prepared and ready to be eaten, whether made on bread, on bagels, on rolls, in pitas, in wraps, or otherwise, and regardless of the filling or number of layers. A sandwich can be as simple as a buttered bagel or roll, or as elaborate as a six-foot, toasted submarine sandwich."
The bulletin then lists many examples of sandwiches including peanut butter and jelly (I assume also taxable without the jelly) and burritos.
This might seem odd, but clearly, there must have been some issue of what is a sandwich for this bulletin to be issued. I still have questions though. What does "otherwise" in the above definition mean? Does it include something wrapped in seaweed and rice (otherwise known as sushi)? What about if you order your sandwich without the bread?
This all just illustrates the complexity of having exemptions and special rules in a tax system. They require definitions which then lead to questions like I pose above. The remedy is to tax everything with a lower rate. And to provide relief to low-income taxpayers in a different way (such as a refundable income tax credit). Another remedy regarding sales tax and food would be to exempt very broad categories. For example, exempt all food as defined as anything you eat that goes through your digestive system.
What do you think?
Tuesday, April 26, 2011
NY Tax Law Defines "Sandwich"
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