ALBANY, N.Y. -- The New York state legislature on Monday approved a drop in state sales taxes on gasoline, though some skeptical lawmakers questioned whether consumers will ever see a corresponding price break at the pump, reported The Buffalo News.
The legislation, approved overwhelmingly by the state Senate and Assembly, calls for capping the state sales tax at a maximum of eight cents a gallon. That means motorists paying $3 a gallon today would save four cents a gallon.
But because gasoline taxes are not collected directly [image-nocss] at the pump, industry officials say those savings likely will be swallowed up by oil companies or petroleum distributors before the gasoline even reaches motorists, said the report.
"Four cents a gallon is beyond a joke; the reality is it does so little it hardly matters," Assemblyman Joel Miller (R) told his Assembly colleagues during floor debate, according to the newspaper.
The tax cut will reduce the state tax on gasoline by about $150 million if current gasoline prices continue.
For drivers, the individual savings will be more modest, the report said. On a 20-gallon fillup at $3 a gallon, the legislation will save 80 cents. But that is only if the tax cuts are passed on to consumers, whichgiven how gasoline taxes are collected and the volatile nature of petroleum pricingwill be impossible for consumers to tell, industry officials said.
Lawmakers, though, say the measure has teeth in it to force the savings to go to consumers. It directs the state Tax Department to monitor the industry to ensure the tax savings are not eaten up by petroleum companies before reaching the pump; it carries penalties of $5,000 for stations that do not pass the tax breaks to consumers.
Station operators, though, say they don't collect the tax, which is paid by distributors before the petroleum even gets to the stations. But that did not stop legislators from hailing the bill as a major event for motorists, The Buffalo News said. "It's the taxpayers of New York State who understand what we're doing today, and that is reducing their taxes," said Sen. James Wright (R), chairman of the Senate Energy Committee.
Governor George E. Pataki on Monday added his voice to critics who worry a windfall could be created for the oil industry if the tax cuts are not passed on to consumers. He has not yet indicated whether he will sign the measure, said the report. Monday, he voiced concerns again that the Legislature did not address calls that he has made to give tax breaks to encourage greater use of alternative fuels. He also wondered how lawmakers envisioned paying for the tax break, since the state budget already was approved.
The legislation leaves it up to local governments to decide whether to also enact gasoline tax cuts. Erie County Executive Joel Giambra said the county cannot afford to cut the 4.75% sales tax on gasoline.
Assemblyman James Hayes (R) said the state should have dug deeper and joined the majority of other states that have no sales taxes on gasoline. "This is just a very small incremental step," he said.
Assemblyman John McEneny (D) said the state could do far more to encourage a reduction in gasoline consumption that, in turn, could help lower prices. He cited pushing motorists to slow down on the highways to 55 mph and financial incentives for carpooling. "I'm not sure how much good it will do or for how long it will do much good," McEneny said of the state sales tax cut.
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