Assembly Expected to Cap Gasoline Tax

Federal inaction forces state to provide relief at the pump
May 9, 2006

Assemblymember Kevin Cahill (D-Ulster, Dutchess) announced the Assembly has proposed a comprehensive plan to bring much-needed relief to motorists by capping the state’s tax on gasoline and diesel fuel – saving consumers potentially $400 million (A.11228). The legislation, currently being negotiated with the Senate, is expected to be in enacted just in time for the summer travel season.

“The Bush Administration’s utter failure to tackle this serious national issue has left us no choice but to provide relief to New Yorkers struggling to make ends meet in the face of skyrocketing energy costs. Washington’s inaction has been a boon for Big Oil. Meanwhile, our families and economy are paying the price,” Assemblymember Cahill said. “Capping the gas tax is like patching a flat tire, it is a short-term fix that will hopefully buy us enough time to address the larger issues. If we don’t use this opportunity to advance aggressive conservation and alternative fuel policies then we are only going to find ourselves stranded a few miles down the road.”

Currently, motor fuel is subject to a state sales tax, which rises as the price of gas goes up. The Assembly’s proposal would eliminate the consumption-based sales tax and replace it with an 8-cent per gallon user tax – preventing New Yorkers from paying higher taxes on escalating fuel prices and saving $200 million a year. In addition, localities could eliminate their portion of the sales tax – saving consumers potentially up to $200 million more. “Unlike the sales tax, a flat amount per gallon is fixed – meaning it won’t increase when the price is raised. At the same time, we encourage motorists to consume less at lower prices because the rate is based on volume – not price,” Mr. Cahill explained.

The Assembly and the Senate are currently negotiating a final package that is expected to address not only the gas tax, but also the issue price gouging. Governor Pataki has yet to publicly weigh in on the issue.