Senator Flanagan Announces Agreement On Cap On Gasoline Taxes

John J. Flanagan

May 10, 2006

Senator John J. Flanagan (2nd Senate District) announced today that an agreement to reduce and cap state sales tax on gasoline has been reached by the Senate and the Assembly. This agreement was pushed for by Senator Flanagan after the Senate passed similar legislation three times in the last year. When enacted, the legislation will go into effect on June 1st of this year to provide relief at the gas pump for the summer driving season.

"The price of gas is continuing to rise and we need to provide relief to our drivers now. Any increase in gas prices leads to an increase in the price of food and other necessities and that hurts our families. The extra money the State collects when the price crosses the $2.00 mark is money that should be returned to the taxpayers and I applaud the Assembly for joining the Senate in returning that money to New York drivers," stated Senator Flanagan.

The agreement would reduce and cap state sales tax on gasoline at eight cents per gallon, effectively freezing the tax at the $2 per gallon rate. The State currently collects an average of twelve cents in sales tax on a gallon of gasoline. The eight cent cap would be reduced proportionately should gas prices fall below $2 per gallon.

Localities also collect between twelve cents and fifteen cents per gallon in sales tax. The agreement would provide local governments with the option of passing a law to cap their portion of sales tax on gasoline to provide drivers with added relief and match the State savings at the local level.

If all localities agree to join New York State in capping the sales tax on gasoline, New York consumers would save about $450 million annually given the current price of fuel at the pump.

"I am hopeful that the Suffolk County will join New York State to provide this relief at the gasoline pump. The residents who live here and those that vacation here during the summer months need this relief and the money that is saved would become revenue for our local retailers," added Senator Flanagan. "It took time for the Assembly to join the Senate and I hope that there won't be a delay in getting the county to join us now."

This legislation has passed the Senate three times prior to today's agreement. The Senate first passed legislation to cap the State and local sales tax on gasoline last September, then again in January and a third time in March as part of the Senate budget proposal. Senator Flanagan had sponsored a petition drive on his web site, www.senatorflanagan.com, to push for the Assembly to join with the Senate and received over 550 electronic signatures.

The measure will require that service station owners pass along the sales tax savings to consumers. The State Commissioner of Taxation and Finance, in conjunction with the Chair of the State Consumer Protection Board, would be charged with enforcing the cap. There would be a fine of up to $5,000 per incident, per day, for stations that do not pass along the savings.

In addition, today's legislative agreement would:
-Provide consumers with a tax credit for the purchase of home heating oil that contains biodiesel fuel. The credit would be equal to the percentage of biodiesel contained in the fuel, i.e. a ten cent per gallon credit for heating fuel containing ten percent biodiesel;

-Create a tax credit for the purchase of energy efficient residential home heating systems. The credit would be equal to fifty percent of the purchase and installation costs, not to exceed $500; and

-Require the State Thruway Authority and New York State Energy Research and Development Agency to develop a plan to make alternative fuels, such as ethanol, available at Thruway service areas.

The Senate and Assembly will continue to discuss proposals that encourage energy conservation, the development and use of alternative sources of energy and the purchase of energy-saving products and materials.

"New York State needs to deliver relief at the pumps now but we also need to work to utilize environmentally friendly energy sources. We have to reduce our reliance on fossil fuels and help our residents make smarter energy choices in the future," concluded Senator Flanagan.

WEDNESDAY, FEBRUARY 1, 2006 - SENATOR FLANAGAN SPONSORS ALTERNATIVE ENERGY INCENTIVES