The impact of declining crude oil prices, already apparent at the gas pump, has now rippled through to New York State’s petroleum business tax (PBT). Effective Jan. 1, the PBT on motor fuel has dropped by a whopping six-tenths of a penny, to 17.8 cents per gallon from 18.4 cents per gallon, according to the state Department of Taxation and Finance.
The PBT — largest element of combined state and local taxes averaging up to 50 cents per gallon of gasoline sold in New York — is linked to a 12-month average producer price index for refined petroleum products, which dropped by about 3 percent during the 12 months ending last August. Wholesale oil prices have dropped by much more than that—now hovering around $50 per barrel, less than half last summer’s peak.
The tax impact of big fluctuations in wholesale prices is muted by PBT’s reliance on a lagged price index–and by a statutory 5 percent limit on annual increases or decreases in the PBT, regardless of how much the price index changes. This is the second consecutive annual decrease in the PBT, which dropped last year by a smaller amount, from 18.6 to 18.4 cents.
If you drive 10,000 miles a year and average 20 miles a gallon, the latest tax decrease will save you a grand total of $3 in the coming year.
As of last October, New York’s average total tax on gasoline was highest in the nation, as calculated by the American Petroleum Institute. Of the nearly $1.2 billion in dedicated transportation funds the PBT will generate in the current fiscal year, $520 million is being funneled to mass transit, and more than three-quarters of what’s left will be diverted to pay debt service on bonds and to underwrite the operating expenses of the state Department of Transportation and the Department of Motor Vehicles. That leaves not much for pay-as-you-go investment in capital construction, which was the state’s justification for expanding the PBT and creating the dedicated fund in 1991. Highway and bridge conditions are … not great.
The bottom line: New York motorists pay a premium, but don’t get a premium return.
About the Author
You may also like
In Pandemic Recovery, New York’s Tax Base Is More Fragile Than Ever
New York's exceptionally wealthy state tax base is also exceptionally fragile, due to its heavy dependence on the highly volatile (and portable) investment-driven incomes of Wall Street workers and fund managers. Read More
Not a Moment Too Soon, Bill de Blasio Is Setting a Good Fiscal Example
After months of flailing, floundering and stalling on desperately needed cuts to New York City's pandemic-ravaged budget, Mayor de Blasio just made a smart and appropriate move to save money—in the process defying one of New York's most powerful government employee unions. Read More
What a New Jersey “Millionaire Tax” Really Means for New York
Hoping to jumpstart a bandwagon effect, advocates of soak-the-rich tax hike proposals in New York State are hyping a tax increase in New Jersey as evidence that New York needs to do the same. Read More
On Measuring School Quality, Education Week Misses the Mark
Education Week’s rankings do not measure what counts. New York’s substandard achievement coupled with highest-in-the-nation spending and above-average wealth means that when it comes to school quality, New York fails to pass the mark. Read More
Even After Aid Cut, New York Will Spend Most on Education
If New York was a country in 2016—the most recent year for global education spending data—it would have boasted the highest per pupil expenditure in the world, even after subtracting 20 percent of state aid. Read More
NY outlook: worse than 2008-09
#NYcoronavirus: The outlook for New York's economy is the grimmest on record, according to the first post-pandemic lockdown round of credible economic surveys and forecasts.
Start with the Federal Reserve Bank of New York, whose regional economists today issued a notably pessimistic report based on their monthly Empire State Manufacturing Survey and a broader Business Leaders Survey that take sin the northern New Jersey and metropolitan New York. Read More
Big bucks, no impact
The billions of dollars funneled from New York's treasury to movie and TV producers had no statistically significant impact on the industry's employment in the Empire State through 2017, according to a new multi-state study of such tax incentives. Read More
SALT suit swept aside
In what could rank among the least surprising federal court rulings of this or any year, a U.S. District Court judge in Manhattan has rejected New York's constitutional challenge to the state and local tax (SALT) deduction cap in the new federal tax law. Read More