gas-pump-150x150-7977232The 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

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

Voters Reject a Pair of Tax Cap-Breaching School Budgets

New York school districts whose budgets were defeated yesterday can hold a re-vote in June on the same proposal or a modified one Read More

State Spending Ante Upped by ‘One House’ Budgets

State spending will rise next year billions beyond what Governor Hochul proposed in her January budget, if the Senate and Assembly have their way. Read More

New Poll: Taxes are Top Reason Residents Looking to Leave New York

High taxes are the top reason New Yorkers are considering or making plans to move out of the state, according to a new Zogby poll. Read More

Sales Tax Receipts Surge Statewide, Filling Local Government Coffers

Local governments across every region of the state raked in robust sales tax collections during the three months that ended on June 30th Read More

Remote Threat 

Remote work and a more mobile professional class will increase the speed and scope of New York's ongoing out migration. Read More

Tax hike and huge spending increase seem likely in next NY budget

New York state today began its 2022 fiscal year without an adopted budget—which, in itself, is not a big deal. The state government can continue to pay bills and employee salaries next week if either final appropriations Read More

DiNapoli Predicts $3.8B More in State Tax Receipts

New York State's tax receipts in the current fiscal year will exceed Governor Cuomo's latest projections by $3.8 billion—still down from last year, but a big improvement over the governor's worst-case scenario—according to updated estimates from state Comptroller Thomas DiNapoli's office. Read More

With Hopes Dashed for “Blue Wave” Bailout, Cuomo Needs to Deal With Budget Shortfall

With the national election results still unclear, Governor Cuomo can no longer put off tough decisions on how to balance New York's pandemic-ravaged state budget. Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@EmpireCenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!