Eliminates state sales and compensating use taxes on motor fuels and diesel motor fuels; authorizes localities to eliminate such taxes at the local level; establishes various exemptions from New York's sales and use tax; provides for a sales tax exemption for housekeeping supplies and for ready-to-eat foods.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A8481
SPONSOR: Barclay TITLE OF BILL:
An act to amend the tax law, in relation to eliminating state sales and
compensating use taxes on motor fuels and diesel motor fuels and author-
izing localities to eliminate such taxes at the local level; and provid-
ing for the repeal of such provisions upon expiration thereof (Part A);
to amend the tax law, in relation to exemptions from sales and use
taxes; and providing for the repeal of such provisions upon expiration
thereof (Part B); to amend the tax law, in relation to providing a sales
tax exemption for housekeeping supplies; and providing for the repeal of
such provisions upon expiration thereof (Part C); and to amend the tax
law, in relation to providing a sales tax exemption for ready-to-eat
foods; and providing for the repeal of such provisions upon expiration
thereof (Part D)
PURPOSE:
This legislation would amend the tax law to provide various state sales
and compensating use tax exemptions on motor fuel, personal care
products, housekeeping supplies and ready-to-eat foods at grocery stores
and restaurants. This legislation also authorizes local governments to
eliminate such taxes on these products at their discretion.
SUMMARY OF PROVISIONS:
Section 1. Enacts into law various components of legislation relating to
establishing various exemptions from New York's sales and compensating
use tax.
Part A: Section 1 amends Subdivision (a) of section 1115 of the Tax Law
by adding a new paragraph (47) to exempt Motor Fuel and Diesel Motor
Fuel from New York State sales tax.
Section 2 through Section 6 amends the tax law to provide for the local
option for local governments to eliminate their portion of sales tax
imposed on motor fuels and diesel motor fuels.
Section 7 provides the effective date. Part B:
Section 1 and 2 amends Subdivision (a) of section 1115 of the Tax Law by
adding a new paragraph (48) to exempt personal care products from New
York State sales tax.
Section 3 through Section 7 amends the tax law to provide for the local
option for local governments to eliminate their portion of sales tax
imposed on personal care products.
Section 8 provides the effective date.
Part C:
Section 1 Subdivision (a) of section. 1115 of the Tax Law by adding a
new paragraph (49) to exempt housekeeping supplies from New York State
sales tax.
Section 2 through 6 amends the tax law to provide for the local option
for local governments to eliminate their portion of sales tax imposed on
housekeeping supplies.
Section 7 provides the effective date.
Part D:
Section 1 amends Subdivision (a) of section 1115 of the Tax Law by
adding a new paragraph (1-a) to exempt ready-to-eat foods sold at
grocery stores, restaurants, diners, taverns, food trucks, catered food
and food sold at food courts from New York State sales tax.
Section 2 through 7 amends the tax law to provide for the local option
for local governments to eliminate their portion of the sales and
compensating use tax imposed on ready-to-eat foods sold at grocery
stores, restaurants, diners, taverns, food trucks, catered food and food
sold at food courts.
Section 7 provides the effective date.
Section 2 of the bill. Contains a severability clause.
Section 3 of the bill. Contains the effective date.
JUSTIFICATION:
Sales Tax is considered one of the most regressive taxes imposed on New
York State residents. Since the tax rate is applied uniformly on
purchases, lower-income households spend a greater share of their income
on sales tax than higher income households. As a result, the sales tax
burden placed on low-income households is significantly higher when
measured.
The COVID-19 pandemic has disrupted nearly every aspect of the global
supply chain leading to a scarcity of a variety of everyday products
consumers rely on. This in turn has led to an increase in the cost of
many everyday needed products including motor fuel, personal care
products, housekeeping supplies and food. This disruption in the supply
chain along with trillions of dollars of new spending by the federal
government has led to a significant increase in inflation and in the
consumer price index both nationally and in New York. Based on a 2019
Consumer Expenditure survey conducted by the U.S. Bureau of Labor
Statistics and Consumer Price Index estimates by Moody's, it is esti-
mated that the average consumer will see a monthly increase in costs of
$287 and an average family of four seeing a monthly increase of $388 in
2021. The increase of prices will also impact New York's revenues.
Since prices are increasing, New York is now seeing increases in State
revenues from Sales Tax. This sales tax windfall also comes at a time
when the State has received significant federal funding of over $12
billion and has also seen a rebound of State tax revenues particularly
from personal income and business taxes. Specifically, State tax
receipts in State Fiscal Year (SFY) 2021-22 exceeded the Enacted Budget
Financial Plan forecast (May estimates) by $7.2 billion through the end
of September. Even more astonishing is that tax receipts through Septem-
ber of 2021 are $13.4 billion greater than they were through the same
month in SFY 2020-21.
The windfall of additional State Sales Tax revenue from inflated prices
of goods should not be compounded on the backs of New York consumers.
The passage of this bill will allow New York consumers to purchase
products that are necessary for everyday like motor fuel, personal care
products, housekeeping supplies and prepared foods without the addi-
tional financial burden of State sales tax. This bill suspends, for
2-years, the State's 4% sales tax on products that families rely on
daily. As mentioned before, NYS has significant revenues to account for
the loss of Sales Tax revenue from the suspension provided in this bill.
Finally, this bill allows localities to also suspend their portion of
Sales Tax on these products, potentially providing additional savings to
consumers.
LEGISLATIVE HISTORY:
A.4558 of 2019-20, Held in Ways and Means.
A.6113 of 2017-18, Held in Ways and Means;
A.5216-A of 2015-16, Held in Ways and Means;
A.1574 of 2013-14, Held in Ways and Means;
A.10355 of 2012, Referred to Ways and Means.
FISCAL IMPLICATIONS:
$2.6 billion in annual State Sales Tax savings to New York State consum-
ers.
EFFECTIVE DATE:
This act shall take effect immediately provided that the applicable
effective date of Parts A through D of this act shall be as specifically
set forth in the last section of such parts.
