Both houses of New York's legislature approved a tax cut on Tuesday for banks and insurance firms.

Under the measure, the tax rate paid by banks and insurance companies would fall to 7.5%, from 9.%, with the cuts phased in over a three-year period beginning in 2001. Banks alone would save $100 million a year upon full implementation.

The measure would restore tax parity in the financial services sector. Last year New York enacted a broad-based measure that cut taxes on securities firms but not banks or insurers. That law goes into effect next year.

Gov. George E. Pataki is expected to sign the new bill shortly.

"It is a very positive signal for the state," said Michael P. Smith, the president of the New York Bankers Association. "We are hoping that the city of New York will follow suit."- Scott Barancik

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