ALBANY - New York State lawmakers should continue nurturing New York's economic recovery by further reducing New York's tax burden, especially by eliminating the gross receipts tax (GRT) on energy, Business Council President Daniel B. Walsh said in testimony to be delivered Tuesday in a hearing on economic development. (To view the testimony click here.)
Also on Tuesday, The Council's research affiliate, The Public Policy Institute of New York State, released a new report on the GRT, entitled The Hidden Tax in New York's Energy Bills. That report, which Walsh cited in his testimony, argues that efforts to reduce energy taxes, beginning with elimination of the energy GRT, will pay off in new growth, especially for the upstate economy. (You can read the full report here.)
In his testimony for the Senate Finance Committee and the Assembly Ways & Means Committee, Walsh praised lawmakers for the personal and business tax cuts of the last few years. He cited the repeal of New York's notorious added estate tax, which took effect this month, as just the latest in a long string of positive steps.
"But we truly have more work to do," he added. "The single most direct step that you and Governor Pataki can take to reduce energy costs for all customers is to eliminate the GRT."
In 1999, he said, New York's electricity rates were above the national average for industry (41 percent), commercial customers (54 percent), and residences (62 percent), and natural gas prices are also higher in New York. A typical New York medium-sized manufacturer pays $23,894 a month for electricity.
The same load in Pennsylvania would cost $19,223; in Michigan and Illinois, the cost about be around $15,000, he said. "Over a full-year, this medium-sized company pays more than $100,000 extra for power, just by virtue of calling New York State home," Walsh testified.
He also said GRT repeal should be retroactive to Jan. 1 for the energy-intensive manufacturing sector, which would especially benefit manufacturing-intensive upstate.
He also recommended:
Expanding Power for Jobs by 200 megawatts as the Governor has urged. But he said lawmakers should not limit utilities to a 50 percent tax credit for revenues lost to the program, which would create additional unrecoverable costs for utilities.
Reducing New York's ton-mileage tax (TMT) to 25 percent of the pre-1998 rates, and converting the remainder into registration fees for trucks. Lawmakers cut this tax two years ago, "but our highway taxes are still uncompetitive," Walsh said.
Updating long-standing sales tax exemptions for telecommunications industry. This exemption originally applied only to "central switching equipment," but should be updated to reflect the emergence of new technologies in this industry.
Reducing the alternative minimum tax (AMT) to 2 percent or lower. The AMT now applies to manufacturing and the securities industry. "We want both of these very important sectors to invest in the Empire State," Walsh said. "Reducing the AMT further, to 2 percent or below, will create more incentive for such development."
Using only in-state sales to determine corporate income. New York's corporate taxes now are based on three factors: in-state sales; percentage of worldwide payroll located in state; and percentage of worldwide property value located in state. By using all three factors, New York actually encourages employers to put new jobs and plants elsewhere-because placing them here would actually drive up their New York taxes, Walsh said.
Reducing local taxes through mandate relief, including: consolidating state and local Medicaid bureaucracies, on which New York taxpayers spend $1.5 billion a year; reforming prevailing-wage laws and the Wicks Law (which requires multiple contractors on public construction projects with estimated costs above $50,000, which inflates costs); and exempting school districts from the Wicks Law.
Investing in education and training. Recommendations include: improving STAR property-tax relief by sending tax benefits directly to taxpayers, not to school districts; expanding on the Governor's recommended funding of $6 million for the Strategic Training Alliance, which provides employer-focused worker training; standing by New York's new higher academic standards; and investing in higher education.
Rejecting proposed increases in business fees to refinance the state's Superfund. Most state-funded cleanups are at municipal sites or sites with no responsible party; since these cleanups yield broad benefits, they should be funded by broad-based general revenues, not narrowly targeted business fees, Walsh said.
The Business Council is New York's largest broad-based business group, representing some 4,000 member companies large and small across the state. Based in Albany, it lobbies for a better business climate, and offers cost-cutting services to its members.
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