What's happening
This bill amends the tax law regarding the taxation and reimbursement rules for aviation fuel businesses and repeals a subdivision.
Why it matters
Narrows eligibility for tax credits and reimbursements. The bill removes the ability for aviation fuel businesses to claim tax reimbursement or credits for kero-jet fuel purchased in New York but consumed outside the state, potentially increasing the overall tax burden on airlines and other aviation operators.
Revises the definition and scope of “aviation fuel business”. The amended language expands who qualifies as an aviation fuel business to include any entity importing aviation fuel into New York via aircraft fuel tanks, regardless of whether the fuel is consumed within the state, broadening the reach of the tax law.
Repeals subdivision (f) of section 301-e. By eliminating this subdivision (details not provided in the visible text), the bill could be removing certain exemptions, special rules, or administrative provisions, which may affect how aviation fuel businesses comply with or are taxed under state law.
Impacts cost structures and potential air service economics. By tightening reimbursement and credit rules, the bill may increase operating costs for airlines or air cargo companies, which could have downstream effects on ticket prices, flight frequency, or the competitiveness of New York airports.
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Who cares
Headline styles
Tax All Jet Fuel Imports
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to investigations and government operations
- Referred to investigations and government operations
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
341
2017-2018 Regular Sessions
IN SENATE (Prefiled)
January 4, 2017
Introduced by Sen. PERALTA -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Government Operations
AN ACT to amend the tax law, in relation to taxation of aviation fuel businesses; and to repeal subdivision (f) of section 301-e of such law relating thereto
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivisions (c), (d) and (e) of section 301-e of the tax law, subdivision (c) as amended by section 25 of part K of chapter 61 of the laws of 2011, subdivision (d) as amended by chapter 309 of the laws of 1996, subdivision (e) as added by chapter 190 of the laws of 1990 and paragraph 2 of subdivision (e) as amended by section 1 of part J of chapter 60 of the laws of 2004, are amended to read as follows:
(c) Kero-jet fuel component. The kero-jet fuel component shall be determined by multiplying the kero-jet fuel rate times the number of gallons of (1) kero-jet fuel imported or caused to be imported into this state by an aviation fuel business and consumed [in this state] by such business in the operation of its aircraft; and (2) kero-jet fuel, which has not been previously included in the measure of the tax imposed by this section, (i) which is sold in this state by an aviation fuel business to persons other than those registered under this article as aviation fuel businesses or (ii) which is consumed in this state by an aviation fuel business in the operation of its aircraft. Provided that importation of kero-jet fuel in the fuel tanks of aircraft shall be importation for the purposes of this section. The basic kero-jet fuel rate shall be six and eight-tenths cents per gallon. The rate shall be adjusted at the same time as the rates of the components of the petroleum business tax imposed by section three hundred one-a of this article,
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00135-01-7
S. 341 2
and the method of making adjustments to the kero-jet fuel rate shall be the same as the method used for such rates.
(d) (1) An aviation fuel business shall be entitled to reimbursement of the tax imposed by this section, less any credit allowed or refund granted, with respect to aviation gasoline purchased in this state and consumed by such business exclusively as aviation fuel in the operation of its aircraft where such aviation gasoline is not consumed in this state, provided that the amount of such tax, less any credit or refund, has been absorbed by such aviation fuel business. Provided, further, an aviation fuel business which has imported aviation gasoline into this state and consumed such aviation gasoline in the operation of its aircraft where a portion of such aviation gasoline is not consumed in this state shall be allowed a credit for such gallonage not consumed in this state in computing the tax imposed by such section.
(2) [An aviation fuel business shall be entitled to reimbursement of the tax imposed by this section with respect to kero-jet fuel purchased in this state and consumed by such business exclusively as aviation fuel in the operation of its aircraft where such kero-jet fuel is not consumed in this state, provided that the entire amount of such tax has been absorbed by such aviation fuel business.
(3)] Any purchaser of aviation gasoline in this state who consumes such aviation gasoline exclusively as aviation fuel in the operation of its aircraft shall be entitled to a partial reimbursement of the tax imposed by this section with respect to aviation gasoline which was purchased by such purchaser and upon which such purchaser paid or absorbed the full amount of the tax imposed by this section (where no partial credit or refund under paragraph two of subdivision (b) of this section was provided with respect to such aviation gasoline) where: (i) such purchaser purchases the aviation gasoline from a fixed base operator which qualifies as a retail seller of aviation gasoline but is not so registered under article twelve-A of this chapter, or (ii) such purchaser purchases the aviation gasoline in bulk from a distributor of motor fuel registered under article twelve-A of this chapter where such distributor delivers such aviation gasoline directly into a bulk storage facility of the purchaser which is at a fixed and permanent place at an airport within this state and is used solely to fill the fuel tanks of its aircraft for use in the operations thereof. The amount of the reimbursement allowable under this paragraph shall be equal to the amount of the partial credit or refund allowable under paragraph two of subdivision (b) of this section.
[(4)] (3) The commissioner shall require such documentary proof to qualify for any credit, refund or reimbursement of tax provided under this subdivision as the commissioner deems appropriate.
(e) All the provisions of this article relating to the administration, collection and disposition of the tax imposed on petroleum businesses, including the registration provisions of section three hundred two of this article applicable to residual petroleum product businesses, shall apply to the tax imposed by this section and the registration under this article of aviation fuel businesses with such modification as may be necessary in order to adapt the language of such provisions to the tax imposed by this section. When reference in this article is made to "the tax imposed under this article" or where words of similar import are used, unless the context indicates otherwise, such reference shall be to the tax imposed under section three hundred one-a of this article and this section. The tax imposed by this section shall be administered jointly in conjunction with, and as a part of, the tax imposed on petro-
S. 341 3
leum businesses as if the provisions of subdivision (a) of this section, imposing the tax under this section, were made a part of the imposition provisions of section three hundred one-a, except where contrary or not applicable to or inconsistent with the provisions of this section. Provided, further, for the purpose of this section:
(1) the term "aviation fuel business" shall mean a "petroleum business" as described in paragraph one or paragraph two of subdivision (b) of section three hundred of this article except that the activities described therein shall separately relate to aviation gasoline (such paragraph one) and kero-jet fuel (such paragraph two) and such term shall also include every corporation or unincorporated business importing or causing to be imported aviation fuel into this state [for consumption by it in this state] by bringing such aviation fuel into this state in aircraft fuel tanks which connect to the engines propelling such aircraft.
(2) [kero-jet fuel and] aviation gasoline consumed in this state shall be presumed to mean all such fuel consumed during takeoffs from points in this state;
(3) where the commissioner [of taxation and finance] decides that with respect to a certain petroleum business any of the methods prescribed in paragraph two of this subdivision do not fairly and equitably reflect fuel consumed in this state, the commissioner shall prescribe methods of attribution which fairly and equitably reflect fuel consumed in this state.
(4) "aviation fuel" means kero-jet fuel and aviation gasoline (as described in paragraph three of subdivision (a) of section three hundred one-b of this article). Provided, further the term kero-jet shall not include naphtha based aviation fuel refined and used solely for propelling military jet airplanes of the United States Armed Forces.
§ 2. Subdivision (f) of section 301-e of the tax law is REPEALED.
§ 3. This act shall take effect on the first of January next succeeding the date on which it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the tax law, in relation to taxation of aviation fuel businesses; and to repeal subdivision (f) of section 301-e of such law relating thereto
Purpose
Taxes aviation fuel businesses for all kero-jet fuel they bring into the state; repealer
Summary of provisions
Section 1 amends subdivisions (c). (d) and (e) of Section 301-e of the Tax Law removing the limitation on taxation of kero-jet fuel, to such fuel that is consumed only within the State of New York.
Section 2 repeals subdivision (0 of Section 301-e of the Tax Law.
Section 3 sets forth the effective date of this legislation.
Justification
According to the Tax Foundation, New York currently ranks near the bottom of the states when it comes to its effective tax rate on commercial jet fuel, at #44 nationwide. In large part, this is due to a loophole in the Tax Law that limits taxation on this jet fuel to only the fuel that is burned within New York State, a large part of which is consumed during the takeoff stage of a flight. New York is one of only three states that taxes only the fuel that is estimated to be burned within state borders. along with New Jersey and Washington. Calculations suggest that taxing only the fuel burned in New York represents a collected tax of approximately .5 cents per gallon, when the stated tax rate of the Petroleum Business Tax is set at 6.8 cents per gallon. This represents a significant loss of tax revenue to the State. All airlines within New York paid a total of $8 million under the Petroleum Business Tax in 2015, suggesting that tens of millions of dollars of tax revenue went uncollected due to this loophole in that year alone.
Additionally, New York law also provides for a complete exemption from the Petroleum Business Tax for carriers that provide nonstop service between four or more cities in New York State. This loophole further exacerbates the loss of revenue to the State that is inherent in the provisions of Section 301-e of the Tax Law.
Prior legislative history
2015-2016 S8075
Fiscal impact
This legislation presents no cost to the State, but instead will significantly increase annual revenues.
Effective date
This act shall take effect on the first of January next succeeding the date on which it shall have become a law.
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