Relates to computing sales and compensating use tax retail sales of motor fuel and diesel motor fuel at a rate of cents per gallon in New York city

Purpose or general idea of the bill

The purpose of this legislation is to require the city of New York to compute its sales and compensating use tax for gasoline and diesel fuels at a flat, cents per gallon, rate rather than the current percentage per gallon rate.

Summary of provisions

Section 1 of the bill amends paragraphs 3, 4 and 6 of subdivision (m) of section 1111 of the tax law, as amended by section 1 of part M-1 of chapter 109 of the laws of 2006, to remove prior discretion afforded to the legislative body of the city of New York to choose to compute its sales and compensating use taxes at a flat cents per gallon rate. This will result in the city of New York being required to compute its sales and compensating use tax for gasoline and diesel fuels at flat, cents per gallon, rate rather than the current percentage per gallon rate.

Section 2 of the bill states that a municipality shall set the rate of tax as provided in paragraph (3) of subdivision (m) of section 1111 of the tax law, beginning June 1, 2017, by local law, ordinance or resolution, and such municipality shall mail, by certified or registered mail, a certified copy of such local law, ordinance or resolution to the commission of taxation and finance at his or her office in Albany on or before May 21, 2017.

Section 3 sets forth an immediate effective date.

Justification

Pursuant to New York State tax law § 1111(m) (1), consumers pay a sales and compensating use tax of 8 cents per gallon for retail sales of motor fuel and diesel motor fuel. This flat rate remains constant regardless of the fluctuations in the base price of a gallon of motor or diesel motor fuel.

However, in the city of New York, in addition to the state sales and compensating use tax on gas, consumers are also forced to pay a city sales and compensating use tax based on a percentage of the sale price of a gallon rather than a flat/fixed cents per gallon tax. The current city sales and compensating use tax on the sale of motor and diesel motor fuel is 4.00% per gallon. The city has continued this policy despite being given authority by the state to go to a flat rate policy in 2006.

Given the rapid and tremendous increase in the cost of oil in the past few months, the application of a percentage based city sales and compensating use tax has resulted in the city of New York benefitting from an undeserved windfall in tax revenue on the backs of consumers who must purchase gas within city lines. Not only are consumers being gouged by the base price of oil but they are also being gouged by the city of New York in its percentage rate collection of sales and compensating use tax.

This legislation will amend the New York Tax Law and require the city of New York to impose flat cents per gallon sales and compensating use tax on the sale of motor and diesel motor fuel.

Legislative history

2013-14: S.663 2011-12: S.6852

Fiscal implications

Yet to be determined.

Effective date

This act shall take effect immediately.