New York State Assemblyman Fred Thiele, of Sag Harbor, is proposing a change to the way the state taxes gasoline, which would result in a tax cut whenever the pre-tax price of gasoline dips to below $2 per gallon—like right now.
Thiele explains that in 2006 the tax law was changed from a 4% tax on the cost of gasoline to a flat tax of 8 cents per gallon. The change was intended to cap the tax, so the state would not receive a windfall when gas prices skyrocketed to $4 or $5 per gallon.
But the law did not account for what would happen when pre-tax gas prices dropped below $2 per gallon.
At $2 per gallon pre-tax, 8 cents per gallon works out to 4 percent. But now that the before-tax cost of gasoline is about $1.75, that 8 cents is about a 4.6% tax.
Because of the 2006 law, motorists are paying the state an extra 1 cent per gallon based on the current price of gas, according to Thiele’s office.
Thiele is proposing that the law be changed to tax gasoline at either 8 cents per gallon or 4% per gallon, whichever is less.
“New York State has the highest gasoline taxes in the nation. Between the federal, state, and local taxes, the tax per gallon is 65 to 70 cents,” Thiele said. “This legislation would at least eliminate one inequality in the way we tax gas.”