New luxury taxes on jewelry are possible in New York and Illinois, and Jewelers of America is organizing the industry to stop them.

The New York state and Illinois measures would, if passed, add a 5 percent luxury tax to jewelry and watch purchases over $20,000. The proposed New York tax is part of the state budget; in Illinois, it’s in a separate bill.

JA is starting the Stop Luxury Taxes fund and has asked companies to contribute. It’s also enlisting its members in letter-writing campaigns (see box).

Matthew A. Runci, chairman and chief executive officer of Jewelers of America, said studies of the nationwide luxury tax repealed in 1993 showed that it raised virtually no revenue because it was so complex to administer; led to layoffs, which increased unemployment costs; and dampened demand for jewelry and watches in general, since many consumers mistakenly believed all jewelry and watches were subject to the luxury tax.