Energy Sales Tax
April 14, 2010
Sales Tax on Energy Cost
Part P of A. 9710B (Assembly Majority Budget Proposal)
MEMORANDUM IN OPPOSITION
Unshackle Upstate, a bipartisan coalition of over 70+ business and trade organizations representing a growing group of over 70,000 employers and employing upwards of 1.5 million people opposes Part P of A. 9710B, which would impose a 4% state sales tax on electricity and gas, and authorize local sales tax on electricity and gas, purchased from an Energy Service Company (ESCO).
Chapter 63 of the Laws of 2000, an omnibus tax bill that restructured State energy taxes, eliminated the 4% sales tax on electricity and gas but then replaced it with a 4% "compensating use" tax under Tax Law Section 1110. The legislation contained a new provision, Tax Law Section 1105C, which eliminated the compensating use tax on utility delivery service when the customer buys electricity or gas commodity separately from an (ESCO).
The Assembly Majority has proposed to repeal specific sections of Chapter 63 of the Laws of 2000, which will result the imposition of additional taxes on electricity and gas. In 2009, electrical generators and utilities in New York State paid more than $6 billion in state and local taxes, assessments and fees, most of which were passed on to residential, commercial and industrial customers. Last year the Assembly Majority voted to increase taxes on energy users through increased 18-a fees ($583M) and new MTA payroll tax.
Energy suppliers, or ESCOs, sell electricity or natural gas to retail customers. These suppliers may be small companies or large corporations. As suppliers of electricity and/or natural gas, they strive to provide their customers with lower, more stable electricity prices and new, innovative electricity-related products and services.
Statewide 15.6% of residence and 24.5% of the small commercial electric customers utilize ESCOs. If the legislature is interested in obtaining parity they should eliminate sales tax on electricity and gas, not increase taxes, again.
For these reasons, Unshackle Upstate strongly encourages the Governor and the Senate to reject this onerous burden in the Enacted State Budget.