End Fossil Fuel Subsidies
S.4816 | A.6882
Every year, New York loses approximately $1.6 billion in tax revenue on fossil fuel related tax expenditures. These subsidies not only prop up an industry that actively damages New York’s environment, but also take funds away from programs that help New Yorkers. As a youth-led organization fighting for environmental and economic justice, the New York Youth Climate Leaders strongly supports S.4816/A.6882, which seeks to eliminate all non-essential fossil fuel related tax expenditures.
Last year, the NYS Senate passed legislation that would have eliminated all fossil fuel related tax expenditures and installed a review process through which the legislature could choose to continue certain tax expenditures. Due to concerns about eliminating tax expenditures that benefit low and moderate income families, the bill was rewritten and reintroduced this legislative session. The current bill attacks fossil fuel tax expenditures with a different approach: instead of eliminating all fossil fuel tax expenditures, S.4816/A.6882 eliminates only the expenditures that provide no benefit to working class New Yorkers.
We see S.4816/A.6882 as a down payment on the fight against climate change. To achieve our CLCPA-mandated greenhouse gas reduction targets, New York must eventually eliminate all fossil fuel subsidies. This bill begins the process of severing ties with the oil and gas industry, and ought to be followed up with legislation that weans the state off of additional fossil fuel subsidies.
By passing this bill and eliminating non-essential fossil fuel tax expenditures, New York State can save $334 million annually. This will align our tax law with our climate law, free up valuable revenue for the State, and protect our environment for future generations. The specific tax expenditures are summarized below and explained in full detail in the bill text.
Sales and Use Tax: Non-Essential Fossil Fuel Tax Expenditures amount to $212 Million
$89 Million Annually: Fuel and gas used directly and exclusively in research & development or production of tangible goods for sale are not subject to sales and use tax.
$4 Million Annually: Gas and electricity used in operating pipelines and natural gas distribution lines are not subject to sales and use tax. The exemption for gas and electric distribution infrastructure incentivizes the operation of dangerous gas pipelines—antithetical to the Climate Leadership and Community Protection Act’s requirement to transition to carbon neutrality by 2050.
$118 Million Annually: Airline fuel is exempt from sales and use tax in New York, and air travel is an enormous contributor to climate change. Eliminating this subsidy is one way to save money and improve the environment without detrimentally affecting low- and middle-income New Yorkers.
$1 Million Annually: New York State directly subsidizes the fossil fuel industry by exempting certain services used in gas or oil production. The services of installing, maintaining, repairing, or servicing property and land used in the production of oil and gas for sale are not subject to sales and use tax.
Petroleum Business Tax: Non-Essential Fossil Fuel Expenditures amount to $122.2 Million
$77.3 Million Annually: Certain petroleum products are exempt from the petroleum business tax. These products include kerosene, the highly polluting bunker fuel used for commercial shipping, and liquid petroleum gases.
$39.85 Million Annually: Petroleum businesses receive additional exemptions or partial exemptions for the sales of petroleum products to certain groups, including governments, manufacturing, commercial gallonage (used for electricity generation), and non-residential heating.
$3.05 Million Annually: While the products and sales described above are exempt or partially exempt from the Petroleum Business Tax, there are also additional credits, refunds, or reimbursements for certain products or consumers: governments, electric utilities, manufacturing, commercial gallonage, mining or extracting, non-residential heating, and bad debts.
$2 Million Annually: Airlines that offer direct flights between four or more cities within New York State are exempt from the Petroleum Business Tax. If we are to adequately address climate change, we cannot subsidize dirty jet fuel for any airlines.