Brooklyn's Progress
June/July 2006

BY LETICIA THEODORE

New York State Governor George Pataki signed a bill instituting a cap on the state sales tax on gas. The move, designed to offer consumers relief from painfully high gas prices, means the levy cannot exceed eight cents per gallon of gasoline; the amount used when gas costs $2 dollars per gallon.

“A few cents isn’t going to make a difference. I don’t think this is going to help,” said Brooklyn Chamber Member Jim Cosares who makes uses his car daily to make site visits daily throughout the city and beyond to keep his insurance business, JimCo Associates, alive. “Any extra cost always comes out of the bottom line for a small business owner.”

Gas station owners who do not lower prices to coincide with the lower tax could face fines up to $5,000 per violation.

“You what’s amazing? The price of crude oil goes up and instantaneously the price of gas goes up,” stated Mr. Cosares. “What about the reserves and gasoline bought at the previous lower price? Gas never seems to go down as the price of oil goes down.”

Governor Pataki says the cap on state’s sales tax on gas must be partnered with efforts to increase the use of alternative fuels and improve energy efficiency. The new bill includes a personal income tax credit of up to $500 for the installation of Energy-Star labeled home heating systems; it also provides and credit of up to 20 cents per gallon for using “bioheat.”

The new bill also gives localities the option of capping their own taxes on gasoline, which typically ranges from 12 - 15 cents per gallon. New York City Mayor Michael Bloomberg backed away from the option saying the City cannot afford to lose the tax revenue - which he says would amount to the salaries of 1,000 police officers or 1,000 teachers. Further, he says, capping the tax doesn’t solve the problem of consumer dependence on foreign oil or the need for better energy efficiency.

Meanwhile, the Governor has vowed to go even further by proposing legislation that would:
· Provide a $2,000 income tax credit for the purchase of a hybrid vehicle.
· Provide a property tax credit for the installation of renewable fuel pumps at gas stations.
· Designate two weeks a year when no sales tax would be charged on the purchase of energy efficient appliances.
· Extend Empire Zone tax benefits to clean energy companies anywhere in New York State.