ROCHESTER, N.Y. — New York’s gas tax holiday goes into effect Wednesday, as gas prices hover at record highs across the U.S. following Memorial Day weekend.
The gas tax holiday was proposed in New York earlier this year, when inflation and the war in Ukraine sent oil prices into the stratosphere, leading to statewide per-gallon prices of over $4 at the pump.
That seems like nothing compared to today’s prices – New York’s average price per gallon was $4.93 as of Tuesday, amounting to a 60% hike compared to last year at this time, when it was $3.08. Meanwhile, the national average was $4.62 on Tuesday, up from $3.05 a year ago.
In order to lessen the strain on New Yorkers’ wallets amid rising costs for other consumer goods, New York lawmakers proposed to ditch the state’s gas tax this year, which in total adds 48 cents to each gallon pumped by drivers.
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How will the gas tax suspension work?
A version of the gas tax proposal passed in the state’s budget in April. It will remove the state’s motor fuel and sales tax from June 1 to Dec. 31, cutting the cost for drivers by about 16 cents a gallon at New York gas stations.
Since then, a number of New York counties also moved to cap their local sales tax on gasoline.
The municipalities would collect a flat-rate sales tax on each gallon – which ranges from 8 and 12 cents per gallon, depending on the county – instead of a percentage, usually around 4%, which fluctuates with the gas price.
Most of those caps expire in November or December of this year.
The revenue lost by suspending the state’s motor fuel and sales tax on gasoline, which amounts to $585 million over seven months, will come out of the state’s general fund. A little more than 80% of the motor fuel tax portion, or about $292 million over that time, would go to the repair of highways and bridges while the remainder goes to mass transit subsidies.
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What was the reaction in New York?
The suspension will bring an estimated $600 million in savings to New Yorkers this year, state Sen. John Mannion, D-Geddes, said Tuesday on Twitter.
“Rising gas prices hurt families and our economy and we are doing everything possible at the state level to lower costs,” Mannion said last week at a media appearance with state Assemblymember Pamela Hunter, D-Syracuse, where they highlighted the need for the cost-saving measure.
The statewide move to cut gas taxes met ire from climate groups, who said New York should be discouraging people to drive. Others worried about the financial damage to transit systems still struggling to emerge from pandemic-induced ridership slumps.
“This sets a dangerous precedent and opens the door to setting triggers for suspending this important revenue if gas prices go too high or raiding the revenue for other uses,” said Lisa Daglian, executive director of the Permanent Citizens Advisory Committee, a commuter group, in April.
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State Assemblymember Angelo Santabarbara, D-Rotterdam, a major proponent of state gas tax legislation this year, pushed back, saying many communities, especially in upstate, are built for a driving populace and don’t have quality mass transit systems.
“The roads are our bloodlines,” Santabarbara said in April. “So, to say that we want to discourage people to drive means that people aren’t going to work, people aren’t going shopping, people aren’t going to visit their families.”
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Santabarbara sent a letter earlier this month to New York’s congressional delegation, pushing them to suspend the federal gas tax.
“After the challenges of the past two years, families deserve all the relief we can provide,” he said in the May 20 letter. “While we have done our part here in New York, suspending the federal gas tax can have a greater impact and help working-class families save more of their hard-earned money during this crisis.”
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Contributing: Thomas Zambito, New York State team.
Follow Sarah Taddeo on Twitter @Sjtaddeo.
