New York City Mayor Michael Bloomberg yesterday called on New York State to reduce or eliminate a business tax to help out small businesses and entrepreneurs.

In what could be his final annual state of the city address, Bloomberg called for Albany to reduce or eliminate taxes on unincorporated businesses.

The tax "unfairly double-taxes thousands of businesses and may discourage recently laid-off New Yorkers from starting to do freelance work or starting their own business, both of which can bolster our economy and help pull us through this recession," he said.

The change would benefit 17,000 small businesses, saving each up to $3,400, he said.

Cutting the tax would require state approval because the only tax the city can change on its own is property taxes. Revenue from the tax goes to the city and cutting it would not affect state revenue.

In November, the city projected a $1.3 billion budget gap for fiscal 2010 but the erosion of tax revenues and proposed state budget cuts could increase the gap to $4 billion, according to city documents. Bloomberg, who is seeking a third term, will present his preliminary executive budget for fiscal 2010 in the last week of the month.

Bloomberg's proposed tax cut was part of a "nine point plan" to help the city economy that included programs already in place, such as the city's capital plan, as well as new proposals. The mayor emphasized the need for workforce training and said the city could help stimulate business by creating entrepreneur boot camps.

Some of his proposals were laid out earlier this month in a letter to the state's congressional delegation, which laid out in broad strokes the city's needs for a federal stimulus package, including infrastructure projects.

The letter also recommended that the federal government provide letters of credit for variable-rate demand bonds, to allow municipalities to advance refund bonds more than once and for the federal Troubled Assets Relief Program to buy auction rate securities.

December tax collections in the state were weak, according to a report released yesterday by state Comptroller Thomas DiNapoli.

"December is typically a big month for state tax collections," DiNapoli said in a press release. "This December, shoppers weren't buying as much and business tax collections were weak."

Sales taxes came in $95.1 million below projections and business taxes were $12.9 million below projections.

Also yesterday, Gov. David Paterson announced that the current-year state budget deficit was reduced by $115 million to $1.6 billion primarily because of auction-rate securities settlements reached by Attorney General Andrew Cuomo with UBS and Citi, which paid $75 million and $50 million respectively.

Last month Paterson proposed a series of cuts and revenue measures to close a $13.7 billion deficit in fiscal 2010.

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