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Northeast - New
York Tax Increases
By Jeffrey Levine, Director,
Government & Regulatory Affairs, GDF SUEZ NA
New York State lawmakers are
negotiating with the governor to pass a state budget proposal
that will attempt to bridge the reported $8 billion deficit.
Having not met the April 1 budget deadline, the state was forced
into emergency stop-gap measures to keep the government open.
Part of the controversy is a proposal to remove an
existing tax exemption that has allowed customers who shop for
alternative suppliers (ESCOs) to avoid paying sales tax on the
energy delivery portion of the bill.
Last summer, New
York City made a similar move by increasing its city sales tax
from 4 percent to 4.5 percent and also ending the same tax
exemption from sales tax on the delivery portion of the bill for
electricity customers who shop for alternative suppliers. The
current proposal would apply statewide, as New York’s localities
typically copy state rules.
This effort had been
percolating for the better part of a year, as the state and city
faced budget shortfalls.
While the proposal is
technically the removal of a tax exemption, the governor’s plan
is being portrayed by opponents as a new tax.
Many
observers viewed the New York City removal of the tax exemption
in 2009 as the harbinger of a broader statewide application in
the future. Whether that future is here is yet to be determined.
With the State Senate being almost evenly split between
Democrats and Republicans, the budget negotiating process is
unpredictable.
This isn’t the only controversial tax
provision. The governor’s budget proposal also would allow local
governments to decide independently of state action to increase
local gross receipts tax from 1 percent to 3 percent.
Also, fresh in the mind of legislators is the 2009 increase of
the “Section 18-a” assessment on energy users. Section 18-a of
the State Public Service Law provides for the collection of
funds from electricity consumers to finance the operations of
energy-related state agencies. The increase was from .33 percent
to 2 percent of a monthly bill. The utility companies have been
collecting the 2 percent fee from customers and remitting it to
the state.
When considered with the other tax provisions,
the negotiations surrounding the sales tax exemption proposal
will be intense, and predicting final action will be difficult.
GDF SUEZ Energy Resources is staying on top of this topic,
and you should not hesitate to
contact your sales representative here if you have any
questions.
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