§ 523. Fuel use tax. (a) Imposition. There is hereby imposed on and
after January first, nineteen hundred ninety-six a tax on fuel use for
the privilege of operating any qualified motor vehicle upon the public
highways of this state.

(b) Rate of tax. The tax imposed by this section shall be at a
composite rate determined by adding together (1) a fuel tax component
which shall be equal to the applicable rate per gallon in effect under
the taxes on motor fuel and diesel motor fuel imposed by article
twelve-A of this chapter and (2) a sales tax component, which shall be
equal to the sum of (A) a state sales and compensating use tax
subcomponent, equal to the applicable rate per gallon in effect under
the sales and compensating use taxes on motor fuel and diesel motor fuel
imposed by sections eleven hundred five and eleven hundred ten of this
chapter as described in subdivision (m) of section eleven hundred eleven
of this chapter plus (B) a local sales and compensating use tax
subcomponent, which shall be the lower of (i) the lowest applicable rate
per gallon in effect under the sales and compensating use taxes on such
fuels in effect in any county of this state imposing a local sales and
compensating use tax on a cents per gallon basis pursuant to the
authority of subpart B of part one of article twenty-nine of this
chapter, or (ii) the equivalent rate per gallon based on the highest
rate applicable to the receipts from the sale of a gallon of motor fuel
or diesel motor fuel in effect in any locality of this state imposing a
local sales and compensating use tax on a percentage rate basis on the
sale of motor fuel and diesel motor fuel pursuant to the authority of
subpart B of part one of article twenty-nine of this chapter. Provided,
however, that the total rate per gallon applicable to the receipts from
the sale of a gallon of such fuels imposed under clause (ii) of
subparagraph (B) of paragraph two of this subdivision shall not exceed
three percent. Such equivalent rate per gallon under clause (ii) of
subparagraph B of paragraph two of this subdivision shall be determined
as provided in subdivision (d) or (m) of section eleven hundred eleven
of this chapter and the schedules prescribed by the commissioner
pursuant to such subdivision (d), and shall be based on the average
price per gallon (including all federal and state and any local taxes
included in such price or imposed on the use or consumption of such
fuels upon which the state and local sales and compensating use taxes
are computed but determined without the inclusion of any state or local
sales tax on receipts from sales of such fuels) paid by the carrier
during the reporting period for all motor fuel and diesel motor fuel
purchased for use in its operations either within or without this state.
For purposes of clause (ii) of subparagraph (B) of paragraph two of this
subdivision, the price for motor fuel and diesel motor fuel purchased by
such carrier shall be deemed to be the prevailing price for motor fuel
and diesel motor fuel, as established by the commissioner each calendar
quarter pursuant to this section, applicable to the reporting period.
The commissioner shall for each calendar quarter establish a prevailing
price for motor fuel and diesel motor fuel based on the prices being
charged on any given day during the first fifteen days of the previous
calendar quarter at a minimum of ten selected truck stops widely
scattered throughout the state. The tax imposed by this section shall be
computed by multiplying such composite rate by the amount of motor fuel
or diesel motor fuel, as the case may be, used by a carrier in its
operations within this state during each reporting period. The amount of
motor fuel and diesel motor fuel used in the operations of any carrier
within this state shall be determined by dividing the number of miles
traveled in this state subject to tax under this section by the average
miles per gallon for the type of fuel. Where the records of any carrier
are inadequate or incomplete, the qualified motor vehicles of a carrier
filing returns shall be deemed to have consumed, on the average, one
gallon of diesel motor fuel for every four miles traveled or one gallon
of motor fuel for every three miles traveled unless substantial evidence
discloses that a different amount was consumed; provided, however, that
if the commissioner enters into a cooperative agreement pursuant to
section five hundred twenty-eight of this article and such agreement
prescribes a different average miles per gallon deemed to be consumed,
the commissioner shall prescribe such different average.