BILL NUMBER: S4193
SPONSOR: GOUNARDES
 
TITLE OF BILL:
An act to amend the tax law and the state finance law, in relation to a
surcharge on online delivery sales in the city of New York
 
PURPOSE OR GENERAL IDEA OF BILL:
To create a 25-cent surcharge on online delivery sales within New York
City in order to support a special capital infrastructure fund.
 
SUMMARY OF PROVISIONS:
Section one of this bill creates a new Article 29-E of the Tax Law to
create a surcharge on online delivery sales within the City of New York
in the form of an additional sales tax. The bill creates the following
new sections:
*Section 1299-T of the Tax Law setting definitions
*Section 1299-U of the Tax Law providing that a twenty-five cent
surcharge shall apply to online delivery sales terminating within the
City of New York
*Section 1299-V of the Tax Law assigning liability for the surcharge to
the seller
*Section 1299-W of the Tax Law creating a registration process for sell-
ers liable for the surcharge under this article
*Section 1299-X of the Tax Law prescribing filing periods for taxpayers
liable for the surcharge under this article, with frequency for the
filing periods based on taxable receipts. This section also creates a
penalty of 200% of surcharge due for willful failure to pay.
*Section 1299-Y of the Tax Law establishing a duty to retain records of
online delivery sales
*Section 1299-Z of the Tax Law setting certain secrecy requirements for
tax returns.
*Section 1299-AA of the Tax Law providing that the provisions of Article
27 of the Tax Law, governing corporate taxes, shall apply with respect
to the administration of this article
*Section 1299-BB of the Tax Law earmarking the revenue from the online
delivery surcharge to the new special New York City capital infrastruc-
ture fund created by section two of this bill.
These provisions of section one of the bill are modeled closely after
similar provisions created for other types of surcharges in Tax Law,
such as those in Article 29-A or Article 29-C.
Section two of the bill creates a new section 99-qq in the State Finance
Law to create a special New York City capital infrastructure fund, to be
funded by revenues collected pursuant to Article 29-E of the Tax Law.
Such infrastructure fund shall be utilized as capital funding, able to
be bonded against for the repair of the Brooklyn Queens Expressway (BQE)
as well as the rehabilitation of ferry docks, marine terminals, piers,
freight rail lines and facilities, urban consolidation centers, and
other related infrastructure in the disposition of such funds. The fund
shall be jointly administered by the state and the City of New York, who
must produce an annual report on how revenues and bonds from the fund
have been expended to support the infrastructure described herein.
Section three of the bill sets the effective date.
 
JUSTIFICATION:
New York City, responsible for $1.59 trillion in gross domestic product
(GDP), is expected to contain nine million residents by 2040, many of
whom rely on quick and easy access to consumer goods in their daily
lives. According to the New York City Department of Transportation
(DOT), close to 90% of goods are moved into and out of the city by
truck, as a result of the shift away from rail and water networks to
highways in the second half of the twentieth century. Heavy-duty diesel
vehicles are responsible for roughly half of on-road tailpipe emissions
even though they represent only a fraction of total vehicle activity in
the city. These tailpipe emissions create a long list of externalities
for environmental justice (EJ) communities in the form of polluted air,
stressed infrastructure, increased traffic congestion, and decreased
quality of life. Freight traffic is expected to grow 67% between 2012
and 2045, and DOT has already observed a 50% increase in traffic across
the Hudson River since January 2020.
A large demand-side factor fueling this surge in traffic is the spike in
24-hour overnight deliveries such as those famously promised by online
retailers like Amazon. Amazon alone has at least ten delivery stations
in New York City and Long Island, with five more e-commerce facilities
slated to come online in the neighborhoods of Sunset Park and Red Hook
in Brooklyn alone (three of these facilities will be used by Amazon,
with the remaining two going to UPS and FedEx). According to the Rens-
selaer Polytechnic Institute's Center for Excellence for Sustainable
Urban Freight Systems, over 2.3 million packages are currently delivered
to New Yorkers every day - up from an average of 1.8 million pre-pandem-
ic.
Furthermore, these last-mile warehouses," representing the place where
packages are stored before they embark on the last mile of their journey
from warehouse to customer doorstep, are fundamentally different from
traditional facilities that store excess inventory. Much larger than a
traditional warehouse, these mass distribution centers also attract a
significantly higher volume of trucks, which are bigger in size and thus
more polluting. In order to meaningfully reduce truck traffic from last-
mile facilities, DOT declared in its 2021 report "Delivering Green: A
vision for a sustainable freight network serving New York City" that it
would need to shift freight from roadways to other modes of transport
like water and rail. A major limiting factor of such a transition,
however, is the physical state of repair of the ports, piers, marine
terminals, rail lines, and other related infrastructure that would make
such a transition possible. The city, state, and other entities like the
Port Authority of New York and New Jersey would need billions of dollars
to make the necessary infrastructure investments to meaningfully make a
dent in heavy-duty vehicle traffic.
This bill aims to correct for some of the externalities created by last-
mile warehouses and their trucking fleets by creating an additional 25
cent surcharge on online delivery sales made within the City of New
York, collected by the online seller but passed on to the consumer as a
separate line item on the customer's receipt. The revenue from the
surcharge would then be remitted to a new, dedicated New York City capi-
tal fund that could be bonded against to invest in alternatives to the
roadway freight described above. The capital funds would also be used
for the repair of the Brooklyn Queens Expressway, which is in need of
$1.5 billion to rehabilitate sections of the expressway literally crum-
bling under the weight of illegally overweight trucks - many of them on
their way to last-mile warehouses in EJ communities.
This bill represents a creative solution to New York City's seemingly
intractable last-mile warehousing and infrastructure problem. By impos-
ing a negligible 25 cent surcharge on the online delivery packages
responsible for the diesel-powered, heavy-duty vehicles polluting our
air, imperiling our bicyclists and pedestrians, clogging our roadways,
and crushing our highways, bridges, and cantilevers, we can begin to
truly invest in alternative modes of freight transportation while secur-
ing needed repairs for the BQE.
 
PRIOR LEGISLATIVE HISTORY:
2024: S5895 - Died in Investigations and Government Operations
2023: S5895 - Died in Investigations and Government Operations
 
FISCAL IMPLICATIONS:
TBD
 
EFFECTIVE DATE:
This act shall take effect on the first of January next succeeding the
date upon which it shall have become a law.