2001 BUDGET BREAKDOWN

Staff Contact:

Repeal of Section 186 (0.75% Utility Gross Receipts Tax on energy) effective 1/1/0; thus resulting in:
Imposition of Article 9-A Corporation Franchise Tax (income-based) on energy utilities retroactive to 1/1/0;
Phase-out of Section 186-a (2.5% Utility Gross Receipts Tax on energy) on the transmission, transportation, and delivery (TTD) of electricity and gas for commercial customers beginning 1/1/1 @ 2.45% and continuing 1/1/2 @1.8%, 1/1/3 @ 1.125%, 1/1/4 @ 0.53125%, and 0% on 1/1/5;
Phase-down of Section 186-a (2.5% Utility Gross Receipts Tax on energy) on the transmission, transportation, and delivery (TTD) of electricity and gas for residential customers beginning 1/1/1 @ 2.45%, and continuing 1/1/2 @ 2.4%, 1/1/3 @ 2.25%, 1/1/4 @ 2.125%, and 2% on 1/1/5;
Phase-out of Section 186-a (2.5% Utility Gross Receipts Tax on energy) on other-than-TTD (essentially the commodity) of electricity and gas as follows: 2.1% on 1/1/0, 2% on 1/1/1, 1.9% on 1/1/2, 0.85% on 1/1/3, 0.4% on 1/1/4, and 0% on 1/1/5;
Phase-out of Section 189 (Gas Importation Privilege Tax on the presumed wellhead price of gas purchased out-of-State and imported for use within New York) as follows: 2.1% on 1/1/0, 2% on 1/1/1, 1.9% on 1/1/2, 0.85% on 1/1/3, 0.4% on 1/1/4, and 0% on 1/1/5;
Creation of an Article 9-A (and Article 22) refundable credit for any Section 186-a and Section 189 taxes (as well as their MCTD surcharges) contained within gas and electricity purchase prices paid (and to-be-paid) by industrial and manufacturing businesses since 1/1/0;
Creation of a Use Tax effective 6/1/0 on out-of-State purchased gas and electricity used within New York increasing State taxation by $40Million in FY and $80Million annually thereafter (local taxation increases are estimated at $40Million and $80Million, respectively, also. This new taxable use expressly is not subject to the 3% Sales Tax imposed by 19 "city" school districts.);
Reduction of the average 4.95 cents/mile Highway Use Tax (aka Ton Mileage Tax) by 0.33 cents/mile (down to 4.62 cents/mile) on 4/1/1 ($10Million);
Allocation (for the apportionment of multi-state income) of a securities firm's receipts based upon the mailing address of the customer and the situs of production credits is effective 1/1/1 for brokerage commissions, margin interest, and account maintenance fees and effective 1/1/3 for principal transactions, security underwriting advisory services, non-combined affiliated loan interest, and merger & acquisition advisory services ($50Million);
Extension of Chapter 407's (of the Laws of 1999) repeal of the elimination of a firm's carryforward Investment Tax Credit, whenever such firm is acquired via a stock purchase, to stock acquisitions occurring on or after 1/1/97 (currently on or after 1/1/0) ($0);
Extension of the (Article 9-A and 32) securities trading equipment Investment Tax Credit to Article 33 taxpayers for property placed in service between 1/1/2 and 9/30/3 ($10Million);
Expansion of the Sales and Use Tax exemption effective 9/1/0 for telecommunications equipment used in the receiving, initiating, amplifying, processing, transmitting, retransmitting, switching, or monitoring of switching of telecommunications services and internet access services for sale ($15 Million inclusive of the next bullet);
Creation of a Sales and Use Tax exemption effective 9/1/0 through 8/31/3 for equipment and services thereon used to upgrade cable television systems to digital cable television ($ see preceding bullet);
Creation of a lower Article 9-A Tax rate of 6.85% on income below $200,000 and reduction of the entity tax on subchapter S corporations effective with the 2004 calendar tax year and thereafter ($20Million);
Creation of a Sales and Use Tax exemption for equipment and services thereon used in the operation of an Internet data center (Web hosting facility) effective 9/1/0 ($9Million);
Creation of a Sales and Use Tax exemption for equipment and services thereon used by or for licensed radio and television stations in the production and transmission of live or recorded programs effective 9/1/0 ($4.7Million);
Acceleration of the 3/1/1 scheduled expansion of the Sales and Use Tax exemption for farming to 9/1/0 and further expansion of the exemption effective 9/1/0 ($6.9Million);
Repeal of Petroleum Business Tax minimum tax filings effective 3/1/1 ($300,000);
Reduction of the Beer Excise Tax by 1.5 cents per gallon on 9/1/3 ($5Million);
Reduction of the Petroleum Business Tax on commercial heating oil partially effective 4/1/1 and wholly effective 9/1/2($7Million);
Creation and extension of tax credits for businesses locating and increasing jobs in the 50 counties outside the Metropolitan Commuter Transportation District ($40Million);
Expansion of the Sales and Use Tax exemption for vending machine to sales priced under 76 cents of candy, confectionery, fruit drinks containing under 70% natural fruit juice, and soft drinks effective 9/1/0 ($5.5Million);
Creation of a Personal Income Tax credit of 20% (maximum credit: $1500) of the cost of proton exchange membrane fuel cell electric generating equipment and planning and labor services thereon on 9/1/3 (e.g., Plug Power) ($5Million);
Expansion of the Sales and Use Tax exemption for pollution abatement purchases used in manufacturing and industrial facilities effective 9/1/1 ($500,000);
Extension of the "Dreyfuss" mutual fund receipt allocation via customer residence to Bank Tax and NYC Tax on 1/1/1;
Allowance of tax credits against the Article 9-A Minimum Income Tax for firms located in Economic Development Zones effective 1/1/1 ($1Million);
Creation of an Article 22 deduction (or 4% credit for non-itemizers) for up to $10,000 of college tuition per student per year phased in @ 25% in 2001, 50% in 2002, 75% in 2003, and 100% in 2004 ($200Million);
Increase of the Article 22 joint filer standard deduction of $13,000 to $13,400 in 2001, $14,200 in 2002, and $14,600 in 2003 thus offsetting a portion of the "marriage penalty" ($200Million);
Expansion of the Article 22 Earned Income Tax Credit to 27.5% in 2002 and to 30% in 2003 and eligibility for the Child Care Credit effective in 2000 ($125Million and $25Million, respectively);
Creation of Articles 9, 9-A, 22, 32, and 33 credit (@10%) for long-term care insurance effective 1/1/2 ($5Million);
Elimination of the Article 9-A fixed dollar minimum tax on homeowners associations on 1/1/1 ($100,000).

And so on.

May 19, 2000