Outline of Governor's Pataki's 2000-2001 Executive Budget tax-related proposalsStaff Contact: Business Council
Alcoholic Beverage Tax
- Accelerate the Small Brewers' Excise Tax Exemption to 1/1/0 (from 4/1/1) the 1999-enacted doubling (from 100K barrels to 200K barrels) of the beer excise tax exemption. This would provide nearly one million dollars in tax savings.
Corporations and Utilities Taxes (Article 9)
- Repeal the Section 186 Franchise Tax on Energy Utilities. [This is currently at 3/4 of one percent on the Gross Earnings (Receipts) and its repeal will shift these utilities to Article 9-A (income-based franchise tax).] No effective date is stated; however, January 1 of this year is a likely date since its adoption reduces projected revenues for FY 2001 from $196 million to $0 and energy companies are subjected to Article 9-A taxation for taxable years commencing after 12/31/99.
- Phase down and eliminate over a six-year period the Section 186-a Gross Receipts Tax on the costs of energy. Industrial purchasers are exempted as of 1/1/0 a credit is hinted to accommodate the retroactivity; $56.8 million is the tax savings projection for FY 2001 and $150 million is the savings projection when fully effective.
- Eliminate the Section 189 Gas Importation Privilege Tax. No effective date is stated; however, April 1 of this year is the apparent date since its adoption reduces projected revenues for FY 2001 from $29 million to $0.
Corporation Franchise Tax (Article 9-A)
- Switch energy utilities (i.e., those subject to Section 186 Franchise Tax on Energy Utilities the 3/4 of 1% portion of the GRT) to taxation hereunder for taxable years commencing 1/1/0.
- Upstate Urban Job Creation Tax Credit: Designed for cities outside the twelve MCTD counties, a credit @ $1,000 (if new jobs pay $8 and up per hour) or @ $500 (if new jobs pay under $8/hour) for each job over the initial 25 created by employers who either open new companies or expand existing businesses that create more than 25 new, full-time jobs maintained for a minimum of two years. The credit is good against a firm's franchise tax liability, that is, Articles 9, 9-A, 32, and 33, and takes effect on 1/1/2. It is estimated to provide twenty million dollars in annual tax relief.
- Brownfield Clean-up Credit: Establish a tax credit effective 1/1/0 equal to the amount spent voluntarily to clean up brownfields. The credit would have an aggregate maximum of $40 million.
- Green Buildings Tax Credit: Establish a credit effective 1/1/1 for building owners for the incremental cost of making a new or existing building meet higher environmental and health standards. A maximum of $25 million in tax savings could be realized over the life of the credit.
- Small Business Tax Rate Reduction: Phase in a tax rate reduction to 6.85% effective in calendar tax year 2002 for corporations with under $200,000 net income. This should produce five million dollars in tax relief when fully effective.
- Elimination of S Corporation Differential Tax: Phase in elimination of the entity-level tax on S corporations becoming effective for most companies in 2002 and providing $35 million in tax relief.
- Upstate High Technology Enterprise Zones: High technology companies which locate or expand in the fifty counties of New York outside the Metropolitan Commuter Transportation District would be eligible for the following package of incentives:
- Tax credit that rebates all energy GRT and GIPT payments ( 186, 186-a, and 189).
- Large technology firms that increase their employment by ten percent above their current Statewide employment numbers would receive an enhanced Qualified Emerging Technology Tax Credit of $2,000 per new employee; smaller firms would double their existing credit to $2,000 per new employee.
- New Research and Development Credit modeled on the Federal credit for research and development costs.
- Refundable credit for interest paid on business investment loans for projects making the cost of capital essentially interest-free for a one-year period.
- When fully effective, this package would generate $80million in tax savings.
- Transportation Infrastructure Tax Credit: Taxpayers who invest in large transportation infrastructure projects, with values of at least $10 million, will receive a credit based on the increase in their payroll over a base amount. In addition, the corporation must add at least 1,000 new jobs Statewide. This new credit would be retroactive to 1/1/0.
- Biotech Refundable Credit: Allow biotechnology corporations a partial refund of unused tax credits.
Metropolitan Commuter Transportation District Surcharge
- The reduction of 186, 186-a, and 189 taxation results in a $39 million tax savings upon application of the MCTD surcharge of 17%.
Petroleum Business Tax
- Eliminate on 4/1/1 the minimum taxes on petroleum businesses ($25/month) and aviation fuel businesses ($2/month). This change has no discernible impact on tax revenues.
Sales and Use Tax
- Simplify effective 3/1/1 the current farming exemption by uniformly exempting all farm-related purchases of property and services used in the daily operations of farms. This would provide twelve million dollars in State and local tax savings when fully effective, but none in FY 2001.
- Internet Web Hosting Equipment Exemption: This new measure would exempt any equipment used in development of facilities used to support Internet web sites. This new credit would become effective on March 1, 2001 and would provide $9 million in tax savings when fully effective, but none in FY 2001.
- Real Property Taxation: Switches over a ten-year period energy companies to same basis as other commercial enterprises.
- Rail Access Tax Initiative: Establish substantial real property tax reduction to rail companies that operate in upstate New York and, beginning in 2001, provide seven million dollars of annual State transition aid to localities for five years to help offset the real property tax reduction.
- Expanded STAR Exemption for Farmers: Grant STAR eligibility to farmers whose primary residences are part of their incorporated farming businesses. The expansion would become effective in 2001 fiscal school years and would provide one million dollars in annual real property tax savings.
- Job-Creating Tax Reduction Fund: Earmarks a $25 million pool of funds that would be used for new tax cuts designed to stimulate job growth and economic development across the State as to be determined by the Governor and Legislature.
- Provide STAR benefits directly to non-senior citizen homeowners, "ensuring taxpayers are not shortchanged by school districts. This new measure ... would protect and simplify STAR savings by cutting out the middlemen school districts that have in many cases used STAR savings to mask increased spending and increased school property taxes. The Governor's plan would deter further erosion of STAR benefits by requiring the State to mail a STAR "Rebate Check" equal to the full amount of STAR tax savings directly to homeowners. In addition to having the State pass on STAR benefits directly to the homeowner, the Governor is also proposing two other reforms that would further strengthen the State's efforts to protect every homeowner's STAR benefits, including a cap on excessive school spending increases and proposals to better inform school voters."
- Increase the maximum authorized 911 surcharge that counties may charge from 35/access line/month to $1/access line/month.