Rpld §301-a sub (g) ¶4, sub (f) ¶3, §301-c subs (i), (j) & (l), §301-d, §301-e sub (f), §1105 sub (c) ¶3 sub¶
(xi), §1115 sub (a) ¶9, amd Tax L, generally
Relates to tax on sales of motor fuel and petroleum products and makes conforming changes; repeals provisions relating to manufacturing gallonage for purposes of the imposition of certain taxes; repeals provisions relating to reimbursement; repeals provisions relating to a utility credit or reimbursement; repeals provisions relating to an aviation fuel business which services four or more cities; repeals provisions relating to services rendered with respect to certain property; repeals provisions relating to fuel sold to an airline for use in its airplanes.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A3675A
SPONSOR: Simon (MS) TITLE OF BILL:
An act to amend the tax law, in relation to tax on sales of motor fuel
and petroleum products and to make conforming changes; to amend the tax
law, in relation to taxes not authorized and the disposition of revenue;
to repeal paragraph 3 of subdivision (f) and paragraph 4 of subdivision
(g) of section 301-a of the tax law relating to manufacturing gallonage
for purposes of the imposition of certain taxes; to repeal subdivisions
(i), (j), and (l) of section 301-c of the tax law relating to reimburse-
ment; to repeal section 301-d of the tax law relating to a utility cred-
it or reimbursement; to repeal subdivision (f) of section 301-e of the
tax law relating to an aviation fuel business which services four or
more cities; to repeal subparagraph (xi) of paragraph 3 of subdivision
(c) of section 1105 of the tax law relating to services rendered with
respect to certain property; and to repeal paragraph 9 of subdivision
(a) of section 1115 of the tax law relating to fuel sold to an airline
for use in its airplanes
PURPOSE:
The purpose of the bill is to repeal certain exemptions from sales and
use tax and petroleum business tax, as well as tax incentives for a
variety of economic development programs, that encourage the use of
fossil fuels.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1: Names the bill.
Section 2-4: Removes incidental fossil fuel incentives within the
Excelsior Jobs Program.
Section 5: Adds fossil fuel businesses to the list of businesses prohib-
ited from participating in the START-UP NY Program.
Section 6: Removes incidental fossil fuel incentives from the Investment
Tax Credit.
Section 7: Conforming technical change.
Section 8: Repeals an exemption from Petroleum Business Tax ,for manu-
facturing using non-highway diesel fuel and residual petroleum product.
Section 9: Repeals exemptions from Petroleum Business Tax for kerosene,
kero-jet fuel, residual petroleum product (bunker fuel), liquefied
petroleum gases, and non-highway diesel motor fuel used for nonresiden-
tial heating purposes.
Section 10: Repeals an exemption from Petroleum Business Tax for sales
to the government of New York state.
Section 11 and 11-a: Repeals a reimbursement for Petroleum Business Tax
paid for non-highway diesel motor fuel used for non-residential heating
purposes, and for motor fuel and diesel motor fuel sold to the govern-
ment of New York state.
Section 12: Repeals a reimbursement for Petroleum Business Tax paid for
commercial gallonage, manufacturing gallonage, and gallonage used in
mining and extracting.
Section 13: Conforming technical change.
Section 14: Repeals a credit or reimbursement for Petroleum Business Tax
paid for residual petroleum product and non-highway diesel motor fuel
used by an electric corporation.
Section 15: Repeals an exemption from Petroleum Business Tax for certain
airlines.
Section 16: Repeals an exemption from Petroleum Business Tax for commer-
cial gallonage.
Section 17: Removes incidental fossil fuel incentives from the Invest-
ment Tax Credit.
Section 18: Removes incidental fossil fuel incentives from the Brown-
field Redevelopment Tax Credit.
Section 19: Removes incidental fossil fuel incentives from the Rehabili-
tation of Historic Properties Tax Credit.
Section 20: Repeals an exemption from Sales and Use Tax for oil and gas
production services.
Section 21: Unrelated cleanup.
Section 22: Repeals an exemption from Sales and Use Tax for airline
fuel.
Section 23: Repeals an exemption from Sales and Use Tax for gas used in
research and development.
Section 24: Repeals an exemption from Sales and Use Tax for fuel and gas
used in production of tangible personal property.
Section 25 and 25-a: Conforming technical changes. Section 26: Unre-
lated cleanup.
Section 27: Repeals an exemption from Sales and Use Tax for gas used to
maintain gas distribution infrastructure.
Section 28: Conforming technical changes. Section 29: Conforming techni-
cal change.
Section 30: Removes incidental fossil fuel incentives from the Rehabili-
tation of Historic Properties Tax Credit.
Section 31: Excludes fossil fuel companies from the definition of quali-
fied emerging technology companies and qualified emerging technology
investments.
Section 32 and 33: Excludes fossil fuel production, transmission,
distribution, transportation, and storage from eligibility for special
tax benefits for qualified New York manufacturers.
Section 34: Effective date.
JUSTIFICATION:
New York State spends over $1.5 billion every year on fossil fuel
related tax expenditures, as well as an unknown sum on economic develop-
ment tax expenditures that incidentally support the use of fossil fuels,
distorting the market and subsidizing the emission of greenhouse gases
that drive the climate crisis. Some of these tax expenditures may serve
a compelling public interest such as offering heating assistance to
low-income New Yorkers. However, a significant proportion cf the spend-
ing serves to prop-up outdated industries or reward energy inefficien-
cies leading to a double cost to taxpayers - once for the direct tax
expenditure and again for the environmental damage resulting from the
continued burning of fossil fuels.
This bill begins the process of aligning New York state tax policy by
repealing some of the more egregious fossil fuel related tax expendi-
tures and ensuring economic development tax expenditures are not
contributing to increased fossil fuel use. Repeal of these expenditures
would save the state at least roughly $336 million annually, based on
information available in the FY 2022 Annual Report on New York State Tax
Expenditures, produced by the Division of Budget.
LEGISLATIVE HISTORY:
2023-24: A7949a Simon S3389 Krueger -referred to economic development
2021-22: S.7438/A.8483 Referred to Economic Dev. Committee
FISCAL IMPACT ON THE STATE:
Potential savings of over $300 million annually.
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to all tax years
commencing on or after the first of January next succeeding the date on
which it shall have become a law.
