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Utilities, IPPs, Consumers Support NY Energy Tax Removal

Utilities, IPPs, Consumers Support NY Energy Tax Removal

New York's utilities, independent power producers, marketers and large energy consumers have banded together for the first time to show their support for Governor George Pataki's plan to restructure the state's energy tax system and give back about $150 million/year in gas and electricity tax revenue.

In a joint statement, the Energy Association of New York State, which represents the utilities; the Independent Power Producers of New York (IPPNY), which represents independent power producers and marketers; and the Industrial Energy Consumers Coalition, representing major industrial and commercial energy consumers; called on the legislature to approve the governor's proposal to reduce and restructure the state's energy taxes, which are the highest in the country.

"New York is famous for taxation," said Carol Murphy, executive director of IPPNY. "Every time we needed revenue, we would go and tax an additional piece of energy. Now with deregulation, we're finding it's difficult for companies to compete in New York because there's all these additional taxes. The utilities make great tax collectors."

Pataki's tax restructuring proposal is included in the state's budget, which was expected to be passed in April but has been delayed while legislators argue over what to do with a $2 billion revenue surplus. The budget probably won't be passed until mid-summer. The energy tax portion of the budget would be phased in over five years, but some components would be retroactive to the first of the year.

Among many other changes, the plan proposes phasing out gas and electric gross receipts taxes by 2003, dropping energy transportation and distribution taxes to 2.5% by Jan. 1, 2000 and repealing the gas import tax 30 days after the bill becomes law. The bill also would retroactively reduce the gas import tax by a small percentage.

"IPPNY supports Governor Pataki's energy tax cut package, particularly the repeal of the 4.25% natural gas import tax," said Murphy. "This tax is an unintended consequence of the changes resulting from deregulation... Lowering generating cost lowers customers costs. It's that simple." Murphy said about $30 million of the $150 million/year in energy tax revenue comes from the gas import tax. The gross receipts tax on energy sales represents the largest portion of the state's energy tax revenue. Doing away with these energy taxes "will put everyone on the same footing," said Murphy.

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