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$260M BACK STAB HILL'S FLIP ON DIPLO TAXES COSTS CITY A BUNDLE

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$260M BACK STAB

HILL'S FLIP ON DIPLO TAXES COSTS CITY A BUNDLE

By JENNIFER FERMINO

The Big Apple recently won a ruling requiring India and Mongolia to fork over some $46 million in back taxes. But Secretary of State Hillary Rodham Clinton has overturned the policy of requiring foreign governments to pay such taxes.

 

 

Thanks a lot, Hillary!

 

In a surprise turnaround that will cost the city $260 million in back taxes and untold millions in future lost revenue, Hillary Rodham Clinton's State Department has quietly reversed a longstanding policy requiring foreign governments to pay taxes on some diplomatic residences.

 

It's a shocking about-face by Secretary of State Clinton -- who repeatedly spoke in favor of the city's right to collect the taxes when she was New York's junior senator.

 

The Big Apple, which recently won a federal court ruling requiring India and Mongolia to fork over some $46 million in back taxes, is expected to lose about $7 million a year in current tax revenues.

 

That number could dramatically increase in the future if property taxes rise.

 

Mongolia and India had appealed the 2008 order requiring them to pay, but neither had given the city its check.

 

Now they don't have to.

 

Adding insult to injury, a week before the June 23 policy change, the Hungarian government wrote the city to say it was planning to clear up its old tax debt, which totaled $32.5 million, for its East 52nd Street consulate.

 

"This offer is made taking into consideration the current economic crisis existing in Hungary and the City of New York," the June 16 letter said.

 

The check was signed and ready to be delivered, according to the letter, written to the city's Commission for the United Nations.

 

The Hungarians also pledged to pony up their current taxes on the July 1 due date.

 

But shortly after the State Department's ruling, they notified the city they wouldn't be paying a penny, a source said.

 

Foreign governments receive tax exemptions for some diplomatic buildings here -- typically their main headquarters and the residence of their chief diplomat.

 

Other buildings, like those housing lesser mission employees, were subject to city tax rules.

 

The $260 million figure represents the amount owed by all foreign countries in back taxes.

 

The new rule will exempt the quarters of all the diplomatic employees living in their government-owned housing, and wipe out any old tax bills or liens on those buildings.

 

Countries that have been paying their bills for years, however, will not be able to get refunds under the new rule.

 

Mayor Bloomberg has been an outspoken opponent of any foreign property-tax exemption.

 

In 2007, when the US Supreme Court ruled that American courts could hear the case against India and Mongolia, he said the decision "brings us closer to finally assuring that countries with missions and consulates in New York pay their fair share in city taxes."

 

Patrick Kennedy, undersecretary of state for management, said the rules change comes because other countries do not apply similar taxes on US properties overseas, which include Army bases, FBI offices and State Department housing.

 

"Those countries have come to us and said, 'Wait a minute. Why is New York taxing us when we don't tax you?' " he said.

 

"This has become a diplomatic irritant. They've held up activity at those locations, not given us building permits."

 

Kennedy acknowledged that New York has more diplomatic housing than any other city in the nation.

 

But he insisted, "New York gets a lot of benefits from having these here."

 

jennifer.fermino@nypost.com

 

 

I am throwing my arms up in the air on this one......like what are these politicians thinking?? and why should they have so much power?? I think her at home "Bill" is messing her thinking.......is he or isn't he getting a rimmy while I am over seas??....I bet he is.....Mrs. Clinton how do you vote....."Yes"

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See this is why politics are a stalemate. You have the worst presidency since Nixon, or some would say Hoover in Bush on the way out, and all the momentum in Democrats favor so that they can make changes that have been needed since "Reaganomics" sent this country and its economy spiraling out of control, and then you have stupid crap like this by Dems basically giving momentum away by shooting themselves in the foot for this kind of crap. The one thing America/NY should not be doing is giving ANY foreign governments breaks because none of them give the US breaks.

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