The newly elected Democratic Congress may reinstate the luxury taxes of the early 1990s, according to a report on tax issues commissioned by the American Watch Association.

In 1990, Congress implemented a luxury tax on jewelry, watches, boats, planes, furs and expensive automobiles. Legislators repealed most of the luxury taxes three years later, although the automobile luxury tax remained for 13 years, according to the report, conducted by Roderick A. DeArment of legal/lobbying firm Covington and Burling.

“Even though Congress learned by 1993 that luxury taxes did not collect as much money as predicted, and that it had a devastating effect on employment in several industries, the turnover in Congress allows bad ideas to resurface so a new group of Congressmen can learn the same lessons again,” the report states.

The report urges the watch industry to stay vigilant and educate its new members about the affects of a luxury tax.

Source: Nationaljeweler.com

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