With some analysts predicting gas prices of $4 to $5 this summer, Assemblymen Brian Kolb (R,C-Canandaigua) and Robert C. Oaks (R,C-Macedon) today renewed their fight for a two-step measure they say would bring relief to New York motorists.
The plan calls for an immediate cap on the state gasoline sales tax for amounts over $2 per gallon, and a long-term solution, known as the Alternative Fuel Incentive Fund, to promote the research, development and usage of alternative energy fuels such as ethanol and bio-diesel.
Some analysts, including John Kilduff, senior vice president of energy risk management at Fimat USA – a commodities trading firm – are predicting crude oil prices could hit $100 a barrel by the end of the year, driving gas prices upwards of $4 to $5 per gallon.
Assemblymen Kolb and Oaks are demanding action and promise a fight over the issue when they return to Albany for Monday’s legislative session.
The tax cap measure earlier passed the state Senate but was defeated in the Assembly, 77-64, on April 11, with 77 majority voting to retain the tax. The Assembly minority say the cap would save motorists 8 to 10 cents per gallon, based on current gas prices of more than $3 per gallon. County governments would have the option of eliminating or retaining their local sales taxes on fuels.
“The state shouldn’t be reaping a windfall on the backs of taxpayers, but that is exactly what is happening, and the more the price of gas rises the higher the tax rate goes, and that is not right,” said Assemblyman Kolb. “We need to give some of that money back to motorists and stop government price gouging.”
“I am pleased we are focusing on alternatives to traditional fuels to give options to consumers in New York and help reduce our dependence on foreign oil sources,” said Oaks. “Not only would alternative fuel sources help ease the burden on travelers, but it would also help area farmers as these new fuels are made from the products they grow.”
New York motorists are paying about 65 cents per gallon in total gas taxes – the highest rate in the Northeast. Included in the price of a gallon of gasoline are motor fuel excise, petroleum business, spill and federal excise taxes, a testing fee, and state and local sales taxes. New York is one of a handful of states to subject gasoline to sales taxes. The sales tax is the only tax pegged to the price of gas, meaning that as motorists struggle to pay higher fuel prices, the state is reaping a windfall. The Assembly minority estimate the state took in $120 million through this system over the past year.
They also unveiled a petition drive to mobilize grass-roots pressure from across the state to enact the cap.
In addition, Assemblymen Oaks and Kolb have introduced a bill to accelerate the state’s transition from fossil fuel usage to one more reliant on alternative and renewable energy sources. They propose placing the state sales tax revenue generated from the second dollar of gas sales into an Alternative Fuel Incentive Fund. It is estimated the proposal would generate $265 million annually to provide tax credits, grants, investments and other incentives to encourage ownership of hybrid and flex-fuel vehicles and construction of alternative fueling stations and refineries. All sales tax revenue currently goes into the state’s general fund.
The assemblymen maintain an accelerated transition to home-grown alternative fuels would lower fuel costs through reduced demand for gasoline, as well as provide for a cleaner environment, more agricultural and manufacturing jobs, and greater national security through energy independence.
The United States is the top consumer of oil worldwide, consuming 300 times more than second-ranked China. That makes the country far too dependent on foreign oil, market disruptions, and supply and demand shifts, the Assembly minority said.
They add that, while hydrogen-powered vehicles are most likely the long-term solution, hybrid vehicles and ethanol and bio-diesel fuels are available now and should serve as the bridge to begin the energy source transition.
The $265 million Alternative Fuel Incentive Fund would be allocated as follows:
- A $500 tax credit per hybrid or “flex-fuel” vehicle purchased.
- A tax credit equal to 30 percent of the costs associated with installing an alternative fueling pump at a gas station.
- $27 million to provide the 27 state Thruway stops with alternative fueling stations.
- Elimination of state and local sales taxes and the motor fuel excise tax on alternative fuels.
- $20 million for construction of a cellulosic ethanol refinery. (cellulosic sources for ethanol are corn stalks, switchgrass, sawdust, paper pulp.)
- $30 million for research and development.
The assemblymen also proposed opening the six existing E-85 fueling stations in the state to the public.
There are approximately 50 makes of vehicles, representing more than 5 million cars, on the road today that are considered “flex-fuel,” meaning they can use E-85 fuel – 85 percent ethanol and 15 percent gasoline.
Gov. George Pataki earlier this week voiced his support for many of the measures and agreed to reopen limited budget talks to address these issues.