Section 1108. Temporary municipal assistance sales and compensating use taxes for cities of under one million

(a) General. On the first day  of  the  first  month  following  the  month in which a municipal assistance
  corporation is created under article ten of the public  authorities  law
  for a city of less than one million, in addition to the taxes imposed by
  sections  eleven  hundred  five  and eleven hundred ten, there is hereby
  imposed on such date, within the territorial limits of  such  city,  and
  there  shall  be  paid,  additional taxes, at the rate of three percent,
  which except as provided in subdivision (b) of this  section,  shall  be
  identical  to  the  taxes  imposed  by  sections eleven hundred five and
  eleven hundred ten.  Such  sections  and  the  other  sections  of  this
  article,  including the definition and exemption provisions, shall apply
  for purposes of the taxes imposed by this section in the same manner and
  with the same force and effect as if the language of those sections  had
  been  incorporated  in full into this section and has expressly referred
  to the taxes imposed by this section.
    (b) Exceptions. (1)  Notwithstanding  any  provision  of  law  to  the
  contrary,  the  receipts from the following shall be exempt from the tax
  on retail sales and the compensating use tax imposed  by  this  section:
  All  sales of tangible personal property for use or consumption directly
  and predominantly in the production of tangible personal property,  gas,
  electricity,   refrigeration  or  steam,  for  sale,  by  manufacturing,
  processing, generating, assembling, refining, mining or extracting;  and
  all   sales  of  tangible  personal  property  for  use  or  consumption
  predominantly either in the production of  tangible  personal  property,
  for  sale, by farming or in a commercial horse boarding operation, or in
  both.
    (2) The transitional provisions contained in  section  eleven  hundred
  six shall not apply to the taxes imposed by this section.
    (3)  Where a sale of tangible personal property or services, including
  an agreement therefor, is made in a city in which the taxes  imposed  by
  subdivision  (a)  of  this  section  apply,  but  the property sold, the
  property upon which the services were performed or such  service  is  or
  will  be  delivered  to  the  purchaser elsewhere, such sale will not be
  subject to taxes imposed by such subdivision (a). However,  if  delivery
  occurs  or  will  occur  in  any  city  where  the  tax  imposed by such
  subdivision (a) applies, a vendor will be required to collect  from  the
  purchaser,  the sales or compensating use taxes imposed by this section.
  For the purposes of this section delivery shall  be  deemed  to  include
  transfer  of  possession  to  the  purchaser  and  the  receiving of the
  property or of the service by the purchaser.
    (4) The  provisions  of  section  twelve  hundred  fourteen  shall  be
  applicable to this section, but any reference in that section to a local
  sales  or  use  tax  imposed  by  a city shall mean the additional taxes
  imposed by subdivision (a) hereof.
    (5) Where a retail sales tax or a compensating use tax was legally due
  and paid to any municipal corporation in this state, without  any  right
  to  a  refund  or  credit  thereof,  with  respect to the sale or use of
  tangible personal property or any of the services subject  to  sales  or
  compensating  use  tax,  if the use of such property or services is then
  subject to the compensating use tax imposed by this section and such tax
  is at a higher rate than the rate  of  tax  imposed  by  such  municipal
  corporation,  the  tax imposed by this section shall also apply but only
  to the extent of the difference in such  rates.  For  purposes  of  this
  subdivision,  a  payment  to  the  tax  commission of a tax imposed by a
  municipal corporation shall  be  deemed  a  payment  to  such  municipal
  corporation.

    (c)  Termination  of taxes. At the end of the last day of the month in
  which all the notes and bonds of such municipal  assistance  corporation
  shall  have  been  fully  paid  and  discharged,  together with interest
  thereon and interest on  unpaid  installments  of  interest,  the  taxes
  imposed  by  this section shall terminate. Despite such termination, the
  provisions of this section and any regulations  promulgated  thereunder,
  including   the   provisions   with   respect  to  assessment,  payment,
  termination, collection and refund of such taxes, the  requirements  for
  filing  returns,  preservations  of  records  and disposition of revenue
  shall continue in full force and effect with respect to all  such  taxes
  accrued up to the effective date of such termination.