BILL NUMBER: S3606A
SPONSOR: KRUEGER
 
TITLE OF BILL:
An act to amend the tax law, in relation to tax on sales of motor fuel
and petroleum products and to make conforming changes; to amend the tax
law, in relation to taxes not authorized and the disposition of revenue;
to repeal paragraph 3 of subdivision (f) and paragraph 4 of subdivision
(g) of section 301-a of the tax law relating to manufacturing gallonage
for purposes of the imposition of certain taxes; to repeal subdivisions
(i), (j), and (l) of section 301-c of the tax law relating to reimburse-
ment; to repeal section 301-d of the tax law relating to a utility cred-
it or reimbursement; to repeal subdivision (f) of section 301-e of the
tax law relating to an aviation fuel business which services four or
more cities; to repeal subparagraph (xi) of paragraph 3 of subdivision
(c) of section 1105 of the tax law relating to services rendered with
respect to certain property; and to repeal paragraph 9 of subdivision
(a) of section 1115 of the tax law relating to fuel sold to an airline
for use in its airplanes
 
PURPOSE:
The purpose of the bill is to repeal certain exemptions from sales and
use tax and petroleum business tax that encourage the use of fossil
fuels.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1: Names the bill.
Section 2: Conforming technical change resulting from renumbering of
paragraphs in section 11.
Section 3: Repeals an exemption from Petroleum Business Tax for manufac-
turing using non-highway diesel fuel and residual petroleum product (ie
No. 5 and 6 fuel oil, Bunker C, and No. 4 diesel fuel).
Section 4: Repeals exemptions from Petroleum Business Tax for kerosene,
kero-jet fuel, residual petroleum product (bunker fuel), liquefied
petroleum gases, and non-highway diesel motor fuel used for nonresiden-
tial heating purposes.
Section 5: Repeals an exemption from Petroleum Business Tax for sates to
the government of New York state.
Section 6 and 6-a: Repeats a reimbursement for Petroleum Business Tax
paid for non-highway diesel motor fuel used for non-residential heating
purposes, and for motor fuel and diesel motor fuel sold to the govern-
ment of New York state.
Section 7: Repeals a reimbursement for Petroleum Business Tax paid for
commercial gallonage, manufacturing gallonage, and gallonage used in
mining and extracting.
Section 8: Conforming technical change to retetter subdivisions amended
in section 7.
Section 9: Repeals a credit or reimbursement for Petroleum Business Tax
paid for residual petroleum product and non-highway diesel motor fuel
used by an electric corporation.
Section 10: Repeals an exemption from Petroleum Business Tax for certain
airlines.
Section 11: Repeals an exemption from Petroleum Business Tax for commer-
cial gallonage.
Section 12: Repeals an exemption from Sales and Use Tax for oil and gas
production services.
Section 13: Unrelated cleanup of an expired provision of tax law.
Section 14: Repeats an exemption from Sales and Use Tax for airline
fuel.
Section 15: Clarifies that cities, counties, and school districts are
not authorized to impose taxes on airline fuel, in conformance with
federal requirements.
Section 16: Requires that all revenue collected from Sales and Use Tax
on airline fuel be deposited in the aviation purpose account of the
dedicated highway and bridge trust fund, in conformance with federal
requirements.
Section 17: Repeals an exemption from Sales and Use Tax for gas used in
research and development.
Section 18: Repeals an exemption from Sales and Use Tax for fuel and gas
used in production of tangible personal property.
Section 19 and 19-a: Conforming technical change related to section 14.
Section 20: Unrelated cleanup to remove duplicative lettering of subdi-
visions in section 1115 of the tax law.
Section 21: Repeals an exemption from Sales and Use Tax for gas used to
maintain gas distribution infrastructure.
Section 22: Conforming technical changes related to section 3.
Section 23: Conforming technical change related to section 9.
Section 24: Effective date.
 
JUSTIFICATION:
New York State spends over $1.5 billion every year on fossil fuel-relat-
ed tax expenditures, distorting the market and subsidizing the emission
of greenhouse gases that drive the climate crisis. Some of these tax
expenditures may serve a compelling public interest such as offering
heating assistance to low-income New Yorkers. However, a significant
proportion of the spending serves to prop-up outdated industries or
reward energy inefficiencies leading to a double cost to taxpayers -
once for the direct tax expenditure and again for the environmental
damage resulting from the continued burning of fossil fuels.
This bill begins the process of aligning New York state tax policy with
our climate mandates by repealing some of the more egregious fossil fuel
related tax expenditures. Repeal of these expenditures would save the
state at least roughly $336 million annually, based on information
available in the FY 2022 Annual Report on New York State Tax Expendi-
tures, produced by the Division of Budget.
 
LEGISLATIVE HISTORY:
2023-24: S.3389/A.7949A
2021-22: S.7438/A.8483 Referred to Economic Dev. Committee
 
FISCAL IMPACT ON THE STATE:
Potential savings of over $300 million annually.
 
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to all tax years
commencing on or after the first of January next succeeding the date on
which it shall have become a law.

Statutes affected:
S3606: 301-a tax law, 301-c tax law, 301-e tax law, 1105 tax law, 1115 tax law, 1148 tax law, 300 tax law, 301-b tax law
S3606A: 301-a tax law, 301-c tax law, 301-e tax law, 1105 tax law, 1115 tax law, 1148 tax law, 300 tax law, 301-b tax law