Assemblyman David G. McDonough (R,C,I-Merrick) today proposed a two-step measure that would bring relief to New York motorists by renewing a minority-sponsored call for a gasoline state sales tax cap for amounts above $2 per gallon. The plan also proposes establishing an Alternative Fuel Incentive Fund to promote research, development and usage of alternative energy fuels, such as ethanol and bio-diesel.

“Skyrocketing gasoline prices are affecting working families across the state, and with some experts predicting prices to reach between $4 and $5 a gallon this summer, it is necessary to provide relief to consumers,” said McDonough. “We also need to look at long-term alternative fuel sources, vehicles and options so we become less dependent on fossil fuels and more on the leading edge of technology.”

The original tax cap measure, which earlier passed the state Senate, was defeated in the Assembly, 77-64, earlier this month, with 77 majority members voting to retain the tax. McDonough said the Assembly minority will force another vote on the cap, which would save motorists an estimated 10 cents per gallon, based on current gas prices. He noted county governments would have the option of dropping or retaining local sales taxes.

New York motorists today pay about 65 cents per gallon in taxes – the highest rate in the Northeast. Included in the price of a gallon of gasoline are motor fuel excise and petroleum business taxes, a testing fee, a spill tax, a federal excise tax, and state and local sales taxes. New York is one of a handful of states to subject gasoline to sales taxes.

McDonough noted that gasoline sales tax is added to the price of gas after federal and state taxes have been imposed, meaning that New York motorists pay taxes on taxes.

The minority proposal would accelerate the state’s transition from fossil fuels to alternative and renewable energy sources. This would reduce fuel costs by easing consumer demand for gasoline. The proposal would dedicate the state sales tax revenue generated from the second dollar of gas purchases to the Alternative Fuel Incentive Fund. Estimates show this would generate $265 million annually to provide tax credits, grants, investments and other incentives to encourage ownership of hybrid and flex-fuel vehicles, and construction of alternative fueling stations and refineries. All sales tax revenue today goes into the state’s general fund.