Monday, April 8, 2013

New York City: Known For Its Transportation & the Nation's Highest Gas Tax

The Big Apple is known for its architecture, museums, and entertainment, but it is also known for something not as glamorous—the highest gas tax in the nation. Based on a report from the American Petroleum Institute, New York’s gas tax is higher than California and Connecticut (two other states with historically high gas taxes) according to January 2013 figures. New Yorker’s paid seven different taxes amounting to 69 cents per gallon, a number about 20 cents higher than the national average of 48.8 cents per gallon (O’Donnell). Drivers pay a myriad of taxes including: a motor fuel excise tax, a petroleum business tax, a state sales tax, and many more related fees, which claim to finance transportation. 

However, according to Robert Sinclair, spokesperson for the American Automobile Club of New York, “None of that revenue is going toward motor-related issues, it’s going to the general fund.” According to the Brooking’s Report regarding the gas tax, “Since the passage of TEA-21 in 1998, New York’s state gas tax has generated approximately $5.8 billion in receipts. The state spent $3.9 billion (67.5 percent) on “state-administered highways,” transferred or directly spent $820 million (14.2 percent) on local government-administered roads, and allocated $953 million (16.5 percent) to fund mass transit.”

In contrast, Carl Davis, senior analyst at the Institute on Taxation and Policy Reform claims, “For the past 20 years, the sales and petroleum business taxes have enabled New York to increase its revenues, which are necessary to keep pace with the rising costs of road construction.” 

The objective of a gas tax is to fund transportation projects, however in New York it has been heralded as a hindrance on the economy. Drivers have been known to travel to New Jersey simply to purchase gas. To mitigate the rapidly increasing price gouging, Jeffrey Klein, a Bronx official who is co-leader of the State Senate has proposed a gas tax holiday on long weekends or holiday weekends to allow people to enjoy the weekend with less burden on their wallets.

At a federal level the gas tax has not been increased in 18 years, making New York’s policy seem progressive. However, although it may be a burden to New Yorkers it is a necessary policy to finance transportation projects. In actuality, the gas tax in New York is modest compared to Europe. The question that remains is how effective is New York’s gas tax? 

Post reviewed by Ben Chaney


"Gas Tax Holiday Proposed For New York; Cuomo Launches Assault on Gouging." CBS New York. 21 Feb. 2013. Web. 3 Apr. 2013.

O'Donnell, Cathey. "New York Fuels Nation's Highest Gas Taxes." (2012) Lohud. The Journal News, 17 Mar. 2012. Web. 3 Apr. 2013.

Puentes, Robert, and Ryan Prince. Fueling Transportation Finance: A Primer on the Gas Tax. Rep. Washington DC: Brookings Institution, 2003. Web.


  1. I really enjoyed this post but it takes an interesting stance on the purpose behind the gas tax. The fact that we are so dependent on gasoline is extremely problematic, so oftentimes, gas taxes have been used to CURB gasoline consumption, not encourage it. And putting funds from the gas tax towards building new roads and freeways and other "motor-related issues," well, that just defeats the purpose, right? I'm all for a "tax holiday" but if you're going to try to lift the burden on people's wallets, why not do it in a way that encourages (or discourages) certain behaviors? Public transit fares get cut in half for the weekend? A major arterial gets closed off to motor traffic on certain holidays? Holiday subsidies for Amtrak and Greyhound fares (for those wanting to go out of town for the holiday)? I know that in some situations, taxes are specifically used towards things that keep the taxed activity going. But do we really need to do that for our car-addicted culture? If you ask me, it sounds like New York's gas tax IS effective, because it's got one of the highest rates of non-personal vehicle use in the country, and I call that success.

  2. You make great points, Haley! It appears that there is a strong push especially from businesses to create a tax-holiday in support of automobiles and getting people out in their cars to spend. However, I agree that free ride days on public transportation, closing streets to encourage bicycling/walking, and the soon to be unveiled Citi Bike Share will provide residents and visitors with yet another option to navigate the city. In addition, although NYC's gas tax is the highest in the country, Chicago and various cities throughout California have the highest overall gas prices in the country. This serves as additional evidence that NYC's gas tax is effective. In essence, the ratio of taxes to gas price in NYC leads to other modes being heavily used.

  3. In regards to how effective the New York gas tax is, I would have to say it's very effective because it is forcing New Yorkers to look closely at their willingness to drive. For some, this is a trip to New Jersey, but for others it might be the nudge they need to explore a different mode of transportation. Considering how willing people are to drive, perhaps the current cost of gas is too low. Lifestyle changes begin when difficult choices have to be made. Perhaps if people are paying more for gas they will begin to see that there are cheaper ways to get places, and spend some time trying to figure out how to save.

  4. Love the comments here, thanks everyone!

    I really like the idea of having a "transit holiday" or something similar. We've see events that close streets to traffic and encourage cycling can have a very positive effect on expanding how people consider cycling as a transportation alternative. Would this work for transit too? With proper planning, I think it could. For example, I think Trimet's free-and-expanded transit on New Years Eve was a big success, though I have not seen any formal assessments.

    Of course, there's a danger that free fare would result in very crowded transit systems, which might be a negative first impression for those looking to "switch" to transit. Some small cities and towns have tried making their transit systems completely free, but would it work in a city like New York, where the transit system can hit capacity during peak times?

    About the gas tax: I think that historically (and in the minds of most voters) the gas tax has been thought of as a user-fee that is necessary to provide a needed public good (roads). In this it is very different than a "sin tax," such as the taxes on alcohol and tobacco, that are intended to discourage use and offset public harm. The gas tax has evolved to address public harm (the LUST program and air quality programs), but has yet to embrace a goal of reducing gas usage.

    Even the federal uses of the gas tax that support alternative modes do so with the goal of improving conditions for motorists by reducing congestion. The Transportation Alternatives funds may represent a break from this mindset, but it's not something I know much about.

    I think the readings about the gas tax make a strong case that it is not a true user-fee, and that it is an ineffective way to send price signals to the consumer. New Yorkers may be more aware of the tax, but my guess is that other factors - density, congestion, parking, and an extensive transit system - play a much bigger role in the city's low auto mode share.


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