Senator Flanagan Announces Senate Passage Of Gasoline Tax Cap

John J. Flanagan

May 15, 2006

In a move designed to deliver some immediate relief to New York drivers, Senator John J. Flanagan (2nd Senate District) announced that the New York State Senate has approved a measure that would reduce and cap state sales tax on gasoline. The legislation approved in the Senate is part of an agreement between the Senate and the Assembly which was reached last week and the legislation has been delivered to the Assembly for action.

This agreement was pushed for by Senator Flanagan after the Senate passed similar legislation three times in the last year. When enacted, the legislation will go into effect on June 1st of this year to provide relief at the gas pump for the summer driving season.

"With an agreement in place, the driving public can be sure that some relief from the spiking price of gasoline is on the way. This will help families all across Long Island by reducing the price of gasoline which should relieve some of the pressures families are facing," stated Senator Flanagan.

The agreement would reduce and cap state sales tax on gasoline at eight cents per gallon, effectively freezing the tax at the $2 per gallon rate. The State currently collects an average of twelve cents in sales tax on a gallon of gasoline. The eight cent cap would be reduced proportionately should gas prices fall below $2 per gallon.

The legislation passed in the Senate would also provide localities with the option of passing a law to cap their portion of the sales tax on gasoline to provide greater savings and relief to New York drivers. Localities currently collect between twelve cents and fifteen cents per gallon in sales tax.

Based on the current price of gasoline, the total savings for drivers across the state would reach an estimated $450 million annually if all localities across the state joined the tax saving effort initiated by the Senate.

"Now that the Assembly has joined us in working to provide this important relief, I look forward to Suffolk County also joining us to deliver the maximum savings possible. With the summer driving season almost upon us, this move will provide savings to our residents and visitors that can be used in our local stores," added Senator Flanagan. "It took time for the Assembly to join the Senate and I hope that there won't be a delay in getting the county to join us now."

This legislation has passed the Senate three times prior to today's agreement. The Senate first passed legislation to cap the State and local sales tax on gasoline last September, then again in January and a third time in March as part of the Senate budget proposal. Senator Flanagan had sponsored a petition drive on his web site,, to push for the Assembly to join with the Senate and received over 550 electronic signatures.

The measure will require that service station owners pass along the sales tax savings to consumers. The State Commissioner of Taxation and Finance, in conjunction with the Chair of the State Consumer Protection Board, would be charged with enforcing the cap. There would be a fine of up to $5,000 per incident, per day, for stations that do not pass along the savings.

In addition, today's legislative agreement would:

-Provide consumers with a tax credit for the purchase of home heating oil that contains biodiesel fuel. The credit would be equal to the percentage of biodiesel contained in the fuel, i.e. a ten cent per gallon credit for heating fuel containing ten percent biodiesel;

-Create a tax credit for the purchase of energy efficient residential home heating systems. The credit would be equal to fifty percent of the purchase and installation costs, not to exceed $500; and

-Require the State Thruway Authority and New York State Energy Research and Development Agency to develop a plan to make alternative fuels, such as ethanol, available at Thruway service areas.

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

"The future for our nation is to move away from our dependency on fossil fuels and I am hopeful that this agreement leads to greater discussion of the future energy needs of our state. We need to provide incentives for our residents to change their fuel use habits and help everyone move towards a better, safer, more energy efficient future," concluded Senator Flanagan.