| Remember the much-talked about gas tax holiday? The gas tax holiday was being pushed as a way to address the rising costs of gasoline and was proposed as a reprieve for drivers during the summer months. Some thought it was a good idea. Others thought it didn't address the real issue when gas prices are so high and oil companies are recording record profits.
David Nachbar unveiled his interesting proposal today which would permanently eliminate the tax on gasoline during the summer months. The outline of the plan is as follows:
- Eliminate the state's 32 cents per gallon tax from Memorial Day through Labor Day permanently.
- A windfall recapture plan consisting of a four percent surcharge to oil companies on gas sold at over $2 per gallon. The surcharge would not apply to the first $2 of gas prices. According to the Nachbar campaign, the recapture will restore projected consumer savings from the 2006 gas tax cap that failed to materialize. Analysts believe that oil companies mainly raised prices gradually and kept that money rather than passing the savings on to the consumers.
Estimated state revenue: $400 million
- A one percent tax on major oil companies' gross receipts in New York State with safeguards to ensure that oil companies simply don't pass along that cost to consumers at the pump.
Estimated state revenue: $200 million
- Revenue generated by the plan would be used for two purposes: Eliminating the state's four percent sales tax on the purchase of hybrid cars. There used to be an income tax exemption for hybrid cars, but that expired three years ago.
The revenue from this plan would also help fund Governor David Paterson's Low Income Home Energy Assistance Program (HEAP).
Here is more on the plan for Nachbar:
Nachbar described his plan as a combination of two failed legislative moves from last legislative year. In May of 2008, Senate Republicans proposed eliminating the sales tax on gasoline. However, in what Nachbar described as an act of "utter fiscal irresponsibility," they neglected to offer any plan to replace the lost revenue. The move would have cut an additional $500 million from already dwindling state finances. Weeks later, Assembly Democrats passed a windfall profits tax on oil companies, similar to Nachbar's proposed legislation, intended to support the state's low-income heating assistance program. Neither proposal was acted on in the opposite house of the legislature, and both failed, in what Nachbar called "classic, dysfunctional, Albany-style political games."
"With our national economy continuing to slide into a recession, the one issue that really hits working families the hardest and most frequently is skyrocketing gas prices," Nachbar said. "And yet, this past year, Albany decided to play politics with two very important issues. My proposal sidesteps the political games and seeks real bipartisan solutions, by merging two proposals into one."
The key with the gas tax holiday is replacing the lost revenue from such a tax cut. If you can do that, that will gain more support than a gas tax holiday without replacing those lost revenues. This plan is strong. Gas tax holidays aren't perfect, but if you can find a way to replace the lost revenues, they become much more viable. Nachbar did that with this plan. |
