Panel Told Of Danger In Capping State Gas Tax

ALBANY — With the state Senate preparing to pass legislation next week capping the sales tax on gasoline, an influential assemblyman yesterday warned about “knee-jerk” responses to skyrocketing gas prices.

“Nothing could be worse than to move forward in a stampede for political expediency and come out with less than effective results for the consumers,” Assembly Energy Committee Chairman Paul Tonko (D-Schenectady) said, as he kicked off hearings on gas and home-heating fuel pricing.

During yesterday’s hearing, SUNY Albany economist Kajal Lahiri predicted that removing taxes will increase fuel consumption, which he said could lead to even higher gas prices.

Lahiri and Tonko said it might be better to use the extra tax revenue collected to help fund alternative fuel options, provide funding to the poor and elderly for home heating, or finance governments, schools and others hit hard by the added fuel costs.

Senate spokesman Mark Hansen defended the Senate’s plan to limit the state sales tax on gas to a maximum of $2 a gallon.

The legislation also includes a provision to provide seniors with a $100 one-time rebate check to help meet their increased energy bills this winter.

Lahiri and Peter Smith, president of the New York State Energy and Research Development Authority, testified during the hearing that the recent spike in gas prices in New York had more to do with gas stations “wanting bigger profits” than an actual supply shortage, which led several lawmakers to charge that widespread price gauging was occuring.