The Business Council strongly opposes the Executive Budget proposal that would authorize a tripling of city and village gross receipts taxes imposed on energy and communication utilities (S.6606-A/A.9706-A, Part HH).
Allowing localities across New York to increase the rate from 1 percent to 3 percent is the wrong step to take at this time. Virtually every city and about two-thirds of the state's villages have already adopted local utility GRTs, and in 2009 their total revenues were about $90 million. This proposal would increase local utility taxes by as much as $140 million dollars per year, resulting in even higher electric, gas and telecommunications costs on business and residential consumers.
New York already has a high cost of doing business, with high state and local taxes already contributing to uncompetitive costs for many utility services.
As illustration, our Public Policy Institute has just completed a report showing that state and local taxes and assessments on electric power alone impose a $6.4 billion burden on the state's economy.
Given the state of the state's economy, and unsustainable rates of increases in the cost of state and local government, we need to be looking at spending controls - including consolidation and mandate relief - as the primary solution to our current fiscal crisis, not higher taxes.
It is essential that New York position itself as a location for new job growth and investment. A better business climate, promoted by lower taxes, is the best economic development policy.
In contrast, this proposal will further damage the state's economic climate, and inhibit economic growth.
For these reasons, we urge the state legislature to reject this local GRT proposal.