What's With the Bagel Tax? Locals React

In one of the strangest laws to be enforced in recent memory, state auditors are making sure that the purchase of a bagel sliced or prepared for consumption at your favorite local deli results in a 8 cent tax.

The law states that sliced or prepared bagels are to be taxed the 8 cents if they are consumed in a deli or restaurant. It does not apply to bagels that are packaged or unsliced. 

And local merchants aren't happy about it.

"I don't make that much money—now that flour and everything is very expensive—I don't think it's right," said Sonya Son, manager of Bagels and More on Halstead Avenue. "When I charge the tax I have to pay it to the government. People say my prices are higher than another deli because I charge tax."

Although few people have heard about the law, it has actually been in existence for years but never heavily enforced. Only recently has concern risen that state auditors could come knocking if the tax goes unpaid—after a New York deli owner contacted media outlets when auditors discovered he wasn't paying the tax.

"I think it's absolutely ridiculous that they should put this kind of tax on a small business owner—she (Son) is trying to make a living here and it's absolutely absurd," said Joseph Demo, a Harrison resident. "If I buy a dozen bagels they won't tax you, but if I buy a dozen bagels and I put cream cheese on it they're going to charge."

Some view enforcement of such a rule during the same summer that Governor Paterson pushed a tax on soda and other sugary drinks as an unfair way to balance the state's current budget shortfall. Although some support has been thrown behind "sin taxes" on things like unhealthy foods and cigarrettes in the past, the small business owners and customers we spoke with in Harrison have had enough.

"You don't want to raise the prices because it's high enough; it's a poor way of hurting the middle-class," said Demo. "They're just looking to make money, just like they were trying to do with the soda tax."

Other store owners say the bagel tax hurts businesses that follow the difficult to enforce rules. It also leaves business owners with a decision to either raise prices or pay the tax from store revenue.

"Owners of small businesses are not making enough money to run the stores and the taxes make it 100 times worse," said Muhammad Tanveer, owner-manager of the Harrison Deli. "In my store, any food or beverage you buy there's no tax on it. In smaller stores, they don't charge the tax on customers."

Although the small tax wasn't designed to be a back-breaker for small and struggling businesses, owners say that in the current economic climate every penny counts.

"The government charges too much tax—everything went up every year," said Son. "The business makes money, but out of my own pocket (because of taxes) it's less money."