Senate To Stop Spitzer Budget Scheme To Raise Gas Prices

Thomas P. Morahan

February 10, 2008

Senator Morahan today announced he will oppose a budget scheme advanced by Governor Spitzer that would eliminate the sales tax cap on gasoline and result in higher prices at the pump for every New York driver.

Under the proposal, the Governor would do away with the gas tax cap enacted in 2006 on any State sales tax over $2 by consolidating the tax into the Petroleum Business Tax (PBT), and would increase gasoline taxes by nearly $56 million annually.

Senator Morahan was instrumental in advocating and winning passage of the gas tax cap two years ago. The cap was passed in the Assembly and signed into law by Governor Pataki, and saved New Yorkers more of their hard-earned money at the pump.

Under the legislation put forward by the Governor, the Petroleum Business Tax (PBT), the Motor Fuel Excise Tax and the sales tax on fuel would be combined under the PBT. The previous cap on Sales and the fixed rate Motor Fuel tax would be indexed just as the existing PBT is indexed. The State Budget Division estimates that the larger index base will increase State fuel taxes by $55.9 million in 2009-10. Streamlining the administration of fuel taxes is a laudable goal, but not if it results in higher taxes.

Earlier this week, the Senate Majority also announced it would reject the "Spitzer Car Tax" when it puts forward its budget next week, since the Governor’s proposed three hundred percent Motor Vehicle Insurance fee hike would unfairly burden Upstate and Long Island drivers and their families.

Under the "Spitzer Car Tax," the fee would increase from $5 to $20 on every vehicle registered in New York. The fee has been scheduled under current law to be reduced to $1 annually on July 1, 2008.

Despite his public pledge not to raise taxes, these two onerous fees are among $1.7 billion in tax and fee increases advanced by the Governor in his 2008-09 Executive Budget. The Senate Majority has opposed the Governor’s efforts to raise taxes on New Yorkers.