New York Gas Tax Break May Be Oversold

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New York Gas Tax Break May Be Oversold

ALBANY, N.Y. -- The cap on New York state's gasoline sales tax, slated to take effect yesterday, won't be saving consumers as much as advertised.

Legislators earlier this month passed a law capping the tax at 8 cents per gallon. Figuring the tax at 12 cents when the price is $3 a gallon, they said the law would save consumers about 4 cents a gallon.

However, the New York Association of Convenience Stores said the savings will probably amount to only 2.5 to 3 cents a gallon because the state sales tax is figured from the price of gasoline before tariffs are added, not the price at the pump.

When retail prices are at $3, the wholesale price paid by distributors, which excludes various state and local taxes, is about $2.70. That means New Yorkers are paying 10.8 cents in sales taxes at the $3 a gallon price, not 12 cents, NYACS said.

NYACS president Jim Calvin also noted that the price of regular gasoline is now averaging $2.96 a gallon.

Gasoline averaged $3.07 in the state last week, according to the federal Energy Information Administration. That's about 3 cents a gallon lower than two weeks earlier.

The tax cap law requires retailers to pass along the entire tax savings to consumers under penalty of law, and Calvin said motorists can count on NYACS member retailers to do so.

However, he cautioned that other factors impact retail prices, especially the product price retailers pay their wholesale supplier, which has been fluctuating in recent weeks. "Conceivably, another spike in wholesale prices could wipe out the savings from the tax cap," he pointed out.

NYACS commended the Legislature and Gov. Pataki for capping the state sales tax on motor fuel. "Any small step that helps restore gas price stability is good for consumers, and for retailers as well," said Calvin. "However, perhaps due to erroneous assumptions, predictions about how much it would lower pump prices were slightly exaggerated."

The state gave counties the option to cap their local share of sale tax on motor fuel as well, but if they do so it won't take effect until July 1 at the earliest.