Senator Marcellino Announces Agreement On Plan To Roll Back Gas Tax

Carl L Marcellino

May 10, 2006

Senator Carl Marcellino today announced a legislative agreement to roll back New York's gas tax to provide relief to strapped motorists faced with rising gas prices. The plan, which will save motorists up to $450 million a year and immediately lower the cost of gasoline in New York by up to eight cents per gallon, is expected to be approved next week and takes effect June 1.

Motorists could achieve the maximum savings if Nassau and Suffolk governments roll back their own tax, as authorized under the agreement.

"Everyone is feeling the pain of soaring gas prices, and with summer driving season approaching, and forecasts for even higher prices at the pump, New Yorkers need relief now," said Senator Marcellino.

"This agreement provides real, short-term relief from rising costs to help motorists trying to cope with high gas prices. It also ends a perverse tax practice that actually created a windfall profit to government at the expense of struggling motorists and taxpayers," Senator Marcellino said.

The joint Senate-Assembly deal caps the state sales tax on gasoline at 8 cents per gallon. Right now, the sales tax is set at a percentage of the price of gasoline, and rises and falls based on the sales price. At $3 a gallon, the state collects 12 cents a gallon in sales tax, and county and other local governments add an additional levy ranging from 12 cents to 15 cents.

The agreement also requires service station owners to pass the savings from the gas cap on to motorists, and sets fines of up to $5,000 per incident for stations that fail to do so.

Senator Marcellino has been urging a roll back of the gas tax since prices begin their recent upward spike. Since then, the Senate has voted twice to impose a gas tax cap. This agreement marks the first time the Assembly has joined in the effort.

The Senate and Assembly will continue to discuss proposals to encourage the development and use of alternative sources of energy and encourage energy conservation and the purchase of energy-saving products and materials.

Legislative Agreement - Energy Tax Bill

Cap State Sales Tax on Gas at $2.00 per Gallon with Local Sales Tax Options:

Fixes the State Sales Tax on motor fuel and diesel fuel at eight cents per gallon (the equivalent of sales tax collected on $2 per gallon under the current structure). This will reduce prices by about 4 cents per gallon, depending on current prices and blend.

If average gas prices drop below $2 per gallon, the fixed State sales tax will decline proportionately in one cent intervals.

Allows local governments the flexibility to choose to; 1) continue to tax gas based on price as they currently do; 2) opt into a cap similar to the State cap of a fixed amount based on $2 per gallon, resulting in additional savings to the consumer, or 3) opt into a cap of a fixed amount based on $3 per gallon or less, preventing any further tax increases if the cost of gas continues to rise. The choice of either fixed amount (i.e. choices 2 or 3) must be done by adoption of a local law or ordinance.

If a local government chooses either of the fixed amounts per gallon and gas prices drop below the cap, the fixed local sales tax will decline proportionately in one cent intervals.

Directs the Department of Taxation and Finance in cooperation with the State Consumer Protection Board to monitor motor fuel retail prices and to impose civil penalties of up to $5,000 per violation for each day a seller does not reduce retail prices in response to the reduction in sales taxation.

Other Provisions of the Legislation:

Allows New York City to reduce or eliminate their sales tax on residential heating fuels.

Creates a personal income tax credit for the replacement of a home heating system that is energy star compliant. The credit is equal to fifty percent of the cost of such replacement not to exceed $500.

Provides consumers with a personal income tax credit for the purchase of home heating fuel that contains biodiesel. The credit is equal to one cent per gallon for each percentage of biodiesel in a gallon of home heating fuel. Based on an average consumption of 800 gallons per year, a 20 percent blend would generate a $160 credit.

Requires the State Thruway Authority and NYSERDA to develop a plan by December 31, 2006 to make alternative fuels, such as ethanol, available at Thruway service areas.