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Governor Signs Gas Tax Cap Legislation
Sales tax relief must be part of larger effort to boost renewable and alternative fuels
Governor George E. Pataki today announced that he has signed a new law to establish a maximum level on the amount of State sales tax on gasoline and diesel fuel purchases. This "gas tax cap" would be set at $2 per gallon, or eight cents in sales tax.
In addition, the Governor again proposed a series of "energy independence" initiatives that would increase the production, distribution, and consumption of renewable fuels as part of a broad plan to reduce New York's dependence on petroleum and imported energy. "The impact of high fuel
prices is being felt by families and businesses across the State, and I am signing this legislation in hopes that these tax cuts will provide some modest relief, especially as we enter the busy summer travel and tourism season," Governor Pataki said. "However, we must build upon this measure by implementing some aggressive, farreaching initiatives to boost the availability and use of homegrown renewable fuels and provide a viable option to gasoline imported from the Middle East. I call on the Legislature to take immediate action to institute incentives for renewable and alternative fuel
sources so that we can achieve real solutions and long-term relief from high energy costs."
Under the new law, New York State will continue to impose sales tax on gasoline and diesel fuel, but will limit the sales taxes collected to a maximum of 8 cents, an amount equal to the sales tax when the fuel price is $2/gallon. If the price of fuel is below $2/gallon, the sales tax will be proportionally applied at the normal rate of 4 percent/dollar.
Other measures enacted by this law include a personal income tax credit of up to $500 for the installation of new energy efficient, Energy Star
home heating systems, and a tax credit for clean heating fuel for residential use of up to 20 cents/gallon based on the percentage of biodiesel in "bioheat," a blend of biodiesel and conventional home heating oil.
New York State invests more than $300 million a year in energy efficiency and renewable energy programs, including the Systems Benefit Charge (SBC), a program operated by NYSERDA that provides $175 million annually to promote greater energy efficiency, lowincome energy assistance, and projects that reduce energy usage.
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