Exempts commercial fuel cell systems and electricity provided by such sources from sales tax

Summary of provisions

Adds a new subdivision (kk) to section 1115 of the tax law to exempt the retail sale or lease and installation of commercial fuel cell electric generating systems equipment and the sale of electricity generated by such systems from the sales and use taxes imposed by sections 1105 and 1110 of the tax law; defines the term "fuel cell electricity generating systems equipment"; amends sections 1210 of the tax law to include tax exemptions for commercial fuel cell electric generating equipment and grants municipalities, including New York City, the authority to enact the same exemption; amends section 1224 of the tax law to clarify that where a county with one or more cities with a population of less than one million elects to enact these tax exemptions for commercial fuel cell systems equipment and electricity, a city within such county shall have the prior right to impose tax on such exempt equipment and/or elec- tricity to the extent of one half of the maximum rates authorized under section 1210(a) of the tax law, and conversely, clarifies that where a city of less than one million has elected to enact these tax exemptions, the county in which such city is located shall have the prior right to impose tax on such exempt equipment and/or electricity to the extent of one half of the maximum rates authorized under section 1210(a) of the tax law.

Justification

Fuel cell electric generating technology has many advantages. Fuel cells commonly provide power to host facilities during power outages, enhanc- ing storm response, and allow critical facilities to remain operational in such events. Fuel cells are exceptionally efficient, they can stretch available supplies of fuel, reduce energy costs and help reduce our dependence on foreign oil. The scalability and resiliency of fuel cells

makes them suitable for a wide range of heat and power needs in homes, offices, and factories. In addition, this technology has a low impact on the environment, with near-silent operation and low emissions, making it suitable in locations where combustion systems may not be appropriate. Also, fuel cells may be used in conjunction with solar panels or wind farms to produce electricity when renewable energy is unavailable. The fact that fuel cells can run 24 hours a day makes them equal or superior in some cases to renewable technologies in terms of the displacement of conventional fossil fuel generation, leading to lower air pollution emissions, including CO2.

For these reasons, fuel cells should be treated on par with solar energy systems when determining eligibility for tax exemptions for the retail sale, installation and electricity generated from commercial fuel cell electric generating technologies. Eliminating all state sales taxes, and providing local municipalities an option to eliminate their portion as well, will: improve our economy, help us meet our clean energy goals, stimulate commercial clean energy installations, and create green collar jobs.

Legislative history

New bill.

Fiscal implications

Approximately $500,000 to the State.

Local fiscal implications

Depends on whether local governments grant tax exemption.

Effective date

This act shall take effect December 1, 2015 and shall apply in accord- ance with the applicable transitional provisions in sections 1106 and 1217 of the tax law.