Senate Majority Leader Joseph L. Bruno and members of the Senate Majority have proposed eliminating the state gross receipts tax on electricity and natural gas, a move that would reduce taxes on utility customers by $710 million a year.
"The GRT is a hidden tax on consumers and business owners, but its effects are quite clear: higher utility costs that make it more expensive to live and create jobs in New York State," Senator Bruno said Dec. 2.
The Business Council's Board of Directors has made repeal of the GRT one of The Council's top priorities for the coming year. Advance Upstate New York and other business groups have also called for reduction or repeal of the GRT.
Senator Bruno championed legislation, passed in 1997 with the strong support of The Business Council, that has already begun to reduce state taxes on utility customers.
Under the 1997 legislation, the GRT, previously 4.25 percent, was cut by .25 percent in 1998. It is scheduled to fall to 3.25 percent on January 1, 2000.
"Coupled with ongoing state initiatives to encourage competition and lower utility costs-top priorities of the Senate Majority-elimination of the GRT will provide real savings for all New Yorkers and help bring our utility costs more closely in line with those of other states, making our state a more attractive place to live and do business," Senator Bruno said.
Under the multi-year plan, industrial-rate gas and electric customers would see average annual savings of $4,600, according to Senate estimates. Large users would see greater savings. Residential electric customers who use 750 kilowatts of power a month would save about $50 a year on electric bills, while average residential gas users would save $33 a year, according to the Senate figures.
Utility companies now taxed under the GRT would switch to an income tax on profits, like other companies, when the law is fully implemented.
Senator Bruno called the proposal the "cornerstone" of the Senate Majority's tax-reduction plan for the 2000 legislative session. Additional proposals are expected later.
The Majority Leader made the announcement in Syracuse in remarks to the New York State Economic Development Council, the statewide association of economic development professionals. NYSEDC is an affiliate of The Business Council.
"What a great way for New York to start the new millennium: by lowering energy costs," said Business Council President Daniel B. Walsh.
"Eliminating the gross receipts tax on electricity and gas would put a very positive jolt into New York's economic recovery, especially upstate, and The Business Council commends Senator Bruno for advancing this proposal," he added.
"Governor Pataki and the Legislature have done much to reduce taxes, but we can and should enact even more cuts to bring New York's tax burden closer to the national norm," Walsh said.
"Senator Bruno's proposal not only wipes out one of our most anti-competitive taxes, it also reminds us that we have not finished the job of tax reduction."
The gross receipts tax is among the reasons New York State's energy costs are well above those in many competing locations, Walsh said.
As of 1996, average electric costs for both industrial and commercial users in New York State were around 55 percent above the national average, while natural gas costs were 44 percent above average.
"There is strong evidence that high energy costs have been a factor in businesses' decisions to leave New York State, to make crucial expansions elsewhere, or simply not to locate in New York in the first place," Walsh said.
"We urge Governor Pataki, Assembly Speaker Silver, and all other lawmakers to join Senator Bruno and to make a tax cut that would significantly bolster our economy," Walsh added.