April 25, 2008

To Cap Or Not To Cap

As the Niagara County Leg debates capping the sales tax on gas purchases, here is a perspective from the Poughkeepsie Journal:

With some Republican state lawmakers clamoring for a suspension of the state's gas sales tax this summer, some counties are taking the opposite approach: lifting what they view as ineffective tax caps.

Onondaga County this month dropped its two-year cap on gas sales taxes after an analysis showed customers were seeing no significant savings at the pump compared to other upstate counties. Other counties made similar choices after the state in 2006 let counties put a cap on taxes collected on gas sales. The cap exempted county sales tax on prices more than $2 per gallon, which was intended to lower costs by 4 cents on a $3 gallon of gas.

At the same time, the state capped its part of the sales tax at 8 cents for gas purchases, which lawmakers say has saved New Yorkers about $450 million a year. Yet Rockland County dropped its county cap late last year and other counties, including Schenectady, Orange and Albany, also abandoned a cap after some determined the savings was simply going back to oil companies. "It is clear that the intended savings for Albany County drivers was a windfall for the oil industry," Albany County Comptroller Michael Conners said in a 2006 report.

Initially, 15 counties capped gas sales taxes, but now it's down to only seven. Officials in one of those, Oswego County, say it is considering dropping the cap when the law expires May 30. "What they found was that by and large they were not able to identify that there was the cost savings directly to the consumer," said Mark LaVigne, spokesman for the state Association of Counties.

Other counties, including Westchester and Monroe, never instituted the cap, in part because they said they didn't want to give up the sales-tax revenue.

But some counties plan to keep the gas-tax cap. Chuck Lafler Jr., chairman of the board of supervisors in Seneca County, said the cap helps keep the county competitive with gas sold cheaper on nearby Indian reservations. Also, truckers stop at the county's rest stop near the state Thruway because gas is slightly less expensive, and that helps the local economy, he said. "If we repeal the tax, I feel more Seneca County residents will feel the pinch," he said. In Onondaga County, though, Executive Joanie Mahoney wants to use the revenue from lifting the cap - about $5 million a year - for property-tax relief.

At the state Capitol, some Republican legislators - with a critical election looming in November - are pursuing the crowd-pleasing proposal of suspending state gas taxes, which are at 32.75 cents a gallon, from Memorial Day to Labor Day.

While the move might help drivers amid skyrocketing gas prices, doing so would cost the state between $500 million and $800 million - at a time when it is already reeling from the struggling national economy. But Sen. Andrew Lanza, R-Staten Island, said the gas-tax suspension would make New York's prices competitive with other states and potentially have a positive economic impact.

9 comments:

Pete M said...

The best way for the county to decide whether to move forward with this is to talk to counties that have done it to learn their experiences, positive and negative. I would hope that someone is doing that.

sick & tired said...

Leave the gas tax alone in this tourist county. Take any excesses that accrue to a fund balance and limit or reduce the property tax rates.

Plus, higher prices encourage conservation. The long term social and geo-political benefits are priceless. Less fuel consumption means less need for imported oil, less vehicle emissions, less large and inefficient automobiles all of which are positives in the long run.

Plus, why should sales taxes be cut for only one product? Clothes? Prepared foods? And cutting taxes on oil companies' products in particular can only serve to feed the already obscene profits that BIG OIL is enjoying.

Larry S said...

I agree, S&T, if indeed the additional revenues are to be used for the benefit of the taxpayer. One thing that I though could possibly negate the increased revenue from higher gas prices is the reduction in revenue from car & truck purchases. They generate millions in DMV and sales tax for NC, and with people tightening their belts and not buying the expensive, large vehicles, the county is sure to see a decrease in that revenue stream.

DS said...

The gas tax should be a flat tax. Not based on percentage. Anything else is nothing but a money grab for the gov't.

Poli Scick said...

I'm not sure about that, ds. If they enact a flat tax, how is it determined what that amount will be? To me, it'd be completely arbitrary. At least with a set percentage, the amount of revenue will ebb and flow with fluctuations in the market.

Mr. Pink said...

The county budget should have a line for how much sales tax received on everything that they expect to receive. Once that number has been achieved, all additional funds should be returned to property taxpayers.

Why should we give a tax break to a tourist from Cleveland visiting the casino or the Canadian shopper headed to the mall?

Give it to overburdened homeowners.

DS said...

Pol... That would kind of be the point. It would be a specific amount per gallon. There's no reason for the gov't to be adding a percentage amount on what a product that people will buy regardless of price. It's not like I can go without gas. I can go without buying more expensive clothes, or even food, but gas is gas.

OBTW Sick.. "BIG OIL" is only making "obscene profits" because their market has expanded greatly in recent years. The P&E ratio is still rather flat.

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