BILL NUMBER: S3228
SPONSOR: ORTT
 
TITLE OF BILL:
An act to amend the tax law, in relation to eliminating state sales and
compensating use taxes on motor fuels and diesel motor fuels and author-
izing localities to eliminate such taxes at the local level; and provid-
ing for the repeal of such provisions upon expiration thereof (Part A);
to amend the tax law, in relation to exemptions from sales and use
taxes; and providing for the repeal of such provisions upon expiration
thereof (Part B); to amend the tax law, in relation to providing a sales
tax exemption for housekeeping supplies; and providing for the repeal of
such provisions upon expiration thereof (Part C); and to amend the tax
law, in relation to providing a sales tax exemption for ready-to-eat
foods; and providing for the repeal of such provisions upon expiration
thereof (Part D)
 
PURPOSE:
This legislation would amend the tax law to provide various state sales
and compensating use tax exemptions on motor fuel, personal care
products, housekeeping supplies and ready-to-eat foods at grocery stores
and restaurants. This legislation also authorizes local governments to
eliminate such taxes on these products at their discretion.
 
SUMMARY OF PROVISIONS:
Section 1. Enacts into law various components of legislation relating to
establishing various exemptions from New York's sates and compensating
use tax.
Part A: Section 1 amends Subdivision (a) of section 1115 of the Tax Law
by adding a new paragraph (47) to exempt Motor Fuel and Diesel Motor
Fuel from New York State sales tax.
Section 2 through Section 6 amends the tax law to provide for the local
option for local governments to eliminate their portion of sales tax
imposed on motor fuels and diesel motor fuels.
Section 7 provides the effective date. Part B:
Section 1 and 2 amends Subdivision (a) of section 1115 of the Tax Law by
adding a new paragraph (48) to exempt personal care products from New
York State sales tax.
Section 3 through Section 7 amends the tax law to provide for the local
option for local governments to eliminate their portion of sales tax
imposed on personal care products.
Section 8 provides the effective date.
Part C:
Section 1 Subdivision (a) of section. 1115 of the Tax Law by adding a
new paragraph (49) to exempt housekeeping supplies from New York State
sales tax.
Section 2 through 6 amends the tax law to provide for the local option
for local governments to eliminate their portion of sales tax imposed on
housekeeping supplies.
Section 7 provides the effective date.
Part D:
Section 1 amends Subdivision (a) of section 1115 of the Tax Law by
adding a new paragraph (la) to exempt ready-to-eat foods sold at grocery
stores, restaurants, diners, taverns, food trucks, catered food and food
sold at food courts from New York State sates tax.
Section 2 through 7 amends the tax law to provide for the local option
for local governments to eliminate their portion of the sates and
compensating use tax imposed on ready-to-eat foods sold at grocery
stores, restaurants, diners, taverns, food trucks, catered food and food
sold at food courts.
Section 7 provides the effective date.
Section 2 of the bill. Contains a severability clause.
Section 3 of the bill. Contains the effective date.
 
JUSTIFICATION:
Sales Tax is considered one of the most regressive taxes imposed on New
York State residents. Since the tax rate is applied uniformly on
purchases, lower-income households spend a greater share of their income
on sales tax than higher income households. As a result, the sales tax
burden placed on low-income households is significantly higher when
measured.
The disruptions in the supply chain along with trillions of dollars of
new spending by the federal government has led to a significant increase
in inflation and in the consumer price index both nationally and in New
York. Inflation has skyrocketed over the past several months with June's
CPI coming in at 9.1%, highest level in 40 years. Energy prices are up
42% on a 12-month basis and the cost of food is up 12%. Consumers are
experiencing higher prices in everything from personal care products, to
housekeeping supplies. Inflation is costing families an additional $460
per month in expenses.
The increase of prices will also impact New York's revenues. Since pric-
es are increasing, New York is now seeing increases in State revenues
from Sates Tax. This sales tax windfall also comes at a time when the
State has received significant federal funding of over $12 billion and
has also seen a rebound of State tax revenues particularly from personal
income and business taxes. Specifically, state tax receipts in State
Fiscal Year (SFY) 2021-22 exceeded the Enacted Budget Financial Plan
forecast (May estimates) by $7.2 billion through the end of September.
Even more astonishing is that tax receipts through September of 2021
were $13.4 billion greater than they were through the same month in SFY
2020-21.
The windfall of additional State Sales Tax revenue from inflated prices
of goods should not be compounded on the backs of New York consumers.
The passage of this bill will allow New York consumers to purchase
products that are necessary for everyday life like motor fuel, personal
care products, housekeeping supplies and prepared foods, without the
additional financial burden of State sates tax. This bill suspends, for
2-years, the State's 4% sates tax on products that families rely on
daily. As mentioned before, NYS has significant revenues to account for
the loss of Sates Tax revenue from the suspension provided in this bill.
Finally, this bill allows localities to also suspend their portion of
Sales Tax on these products, potentially providing additional savings to
consumers.
 
PRIOR LEGISLATIVE HISTORY:
2023-2024: S.3124/A.1690 Referred to Budget and Revenue/Ways and Means
2021-2022: S. 9505 Referred to Rules
 
FISCAL IMPLICATIONS:ò
$2.6 billion in annual State Sates Tax savings to New York State consum-
ers.
 
EFFECTIVE DATE:
This act shall take effect immediately provided that the applicable
effective date of Parts A through D of this act shall be as specifically
set forth in the last section of such parts.

Statutes affected:
S3228: 1115 tax law, 1107 tax law, 1210 tax law