It’s becoming more likely that New York could see a suspension of some gasoline taxes in the new state budget to help ease steeply rising gas prices linked to the Russian invasion of Ukraine.
The state Senate included a temporary halt to some of the gas taxes in its budget plan, which was released this week. The plan would suspend portions of the state’s motor fuel and sales tax on gasoline beginning on May 1 and lasting through the end of the year. Together, they total 16 cents per gallon. The savings are required to be passed on to consumers.
Senator James Skoufis, speaking during debate on the Senate floor, called the gas tax break a “kitchen table” issue.
“If you’re one of the millions of New Yorkers who is paying through the nose at the pump, this budget provides relief through a gas tax holiday,” the Democrat said.
The state Assembly’s budget plan does not include the gas tax suspension, but Democratic Speaker Carl Heastie says he’s happy to talk about the proposal. He questions, though, whether the tax break would make a significant difference if prices continue to spiral up.
“I’m open to that discussion,” Heastie said. “But this thing is just so uncertain, in terms of the war in Ukraine, what’s going to happen.”
In addition to the motor fuel and state sales tax, New York also imposes a petroleum business tax on gasoline suppliers, which often pass it on to consumers. That tax, which is about 17 cents per gallon, would not be affected in the proposal.
Local governments also impose gas taxes, which average about 14 cents per gallon, according to the state Division of the Budget. While the state taxes are each capped at 8 cents per gallon, local sales taxes on gasoline are based on a percentage of the price, so they increase as gas prices go up.
The Senate plan would allow local governments to suspend their gas taxes if they choose to.
Governor Kathy Hochul says she is also interested in looking at suspending the gas tax. But the Democrat says that would have consequences for road and bridge upkeep and public transit systems.
“We understand that this is one area we should be looking at, and we are looking at it,” Hochul said. “But…the people who are calling for the end of the gas tax are also asking for more money for infrastructure.”
Altogether, the gas taxes bring in nearly $2.8 billion a year and finance nearly half of the state’s Dedicated Highway and Bridge Trust Fund, which pays for hundreds of construction and repair projects each year.
The Metropolitan Transportation Authority gets a quarter of its operating budget from the gas taxes, while other cities’ public transit systems are less dependent on the taxes and receive an average of 5% of the revenue.
The Senate proposal takes $650 million from a reserve fund set aside by Governor Hochul to help pay for the projects.