Excise taxes in New York are specific levies imposed on the sale of particular goods and services, such as motor fuel, health insurance premiums, and recreational marijuana, to generate government revenue. This page covers CBC’s work on motor fuels taxes, Health Care Reform Act (HCRA) surcharges, vehicle-miles-traveled fees, recreational marijuana tax structures, and fees on single-use carryout bags.
This page was created with AICBC Insights uses AI to group, analyze and present data and recommendations from CBC's publications. Always reference the cited sources to verify important details..
The Governor and legislature should develop and advance a comprehensive proposal this year, one that raises sufficient revenues to reduce transportation funding shortfalls and to support additional mass transit service to meet the needs of those drivers who choose to switch modes.
New York ought to prepare for the continued erosion of revenues, and it should consider user fees that supplement fuel taxes.
The State needs to begin the thoughtful process to develop a VMT fee.
Increasing fuel taxes, vehicle fees, and toll rates to those of New York’s neighbors can raise significant sums in the short-term.
Revenue from excise taxes on marijuana should be allocated through the budget process rather than being earmarked in statute.
Key Data
In a November 2020 report, the CBC noted that California's recreational marijuana tax structure includes a $9.65 per ounce excise tax on the first sale.
As of March 2020, HCRA taxes increase health insurance premiums by at least 4.3 percent, which equates to approximately $1,000 annually for a family plan.
Writing in March 2020, the CBC reported that HCRA revenues have grown to nearly $6 billion annually, with the majority of these funds now used to offset Medicaid costs in the General Fund.
In April 2019, the CBC supported legislation to authorize a 5-cent fee on most paper carryout bags to help reduce the number of single-use bags in the waste stream.
As of March 2019, New York's Motor Fuels Tax is an 8 cent per gallon excise tax on gasoline and diesel sales, which generated $512 million in revenue in fiscal year 2018.
New York should approach potential recreational marijuana tax revenues with caution, as experience in other states indicates it takes three to four years to generate consistent income. Future revenue should be kept on-budget and not earmarked for specific purposes, ensuring funds are available for general operating needs rather than off-budget trusts.
Recommendations related to Excise Taxes
State leaders should be cautious and pragmatic when estimating revenues, as it takes approximately three to four years to realize consistent tax receipts.
Any future revenue should be received and spent on-budget, rather than through off-budget trusts or other fiscal gimmickry.
Marijuana revenue should not be committed to a specific purpose, but rather used for recurring operating budget purposes.
Dedicating a portion of revenue to cover administrative costs and fund consequential public health and substance abuse programming may be reasonable.
Key Data
$341,691,001
— Colorado recreational marijuana tax revenue collected between July 2019 and July 2020.
$395,523,567
— Washington recreational marijuana tax revenue collected between July 2018 and June 2019.
$225,543,653
— Alaska recreational marijuana tax revenue collected between September 2019 and August 2020.
$142,517,466
— Oregon recreational marijuana tax revenue collected between September 2019 and August 2020.
$764,000,000
— California recreational marijuana tax revenue collected between July 2019 and June 2020.
$68,750,000
— Massachusetts recreational marijuana tax revenue collected between July 2019 and June 2020.
New York's Health Care Reform Act (HCRA) taxes, which generate nearly $6 billion annually, increase health insurance premiums by approximately 4.3% and effectively reduce employee wages. These taxes are increasingly used to offset Medicaid costs in the General Fund rather than funding their originally intended public health programs.
Recommendations related to Excise Taxes
HCRA tax increases should be avoided as a strategy for balancing the Medicaid budget because that action increases the cost of health insurance premiums and likely depresses wage growth for a majority of New Yorkers.
As lawmakers negotiate this year’s budget and evaluate the State’s five-year financial plan, they should review HCRA’s role in health care funding and its impact upon privately insured New Yorkers.
Key Data
$6 billion
— Annual revenue generated by HCRA taxes.
4.3%
— Combined impact of HCRA taxes on health insurance premiums.
$1,000
— Statewide average annual cost of HCRA taxes for a family health insurance plan.
$557 million
— Amount of Surcharge revenue paid by the federal government in fiscal year 2020.
$700 million
— Annual amount the State government pays via HCRA taxes through Medicaid surcharges and employee insurance premiums.
$2.5 billion
— Savings target for the State budget assigned to the Medicaid Redesign Team.
1.28 cents is the amount New York collects in fuel taxes for every vehicle mile driven. A recent CBC report "Switching Gears" explored the implementation of an innovative approach to finance highway and bridge improvements: a vehicle-miles traveled fee. What’s a VMT, and how does it work? CBC's Patrick Orecki…
It’s no secret New York’s roads are in dire need of repair, and now there are numbers to prove it. A new report by the Citizens Budget Commission says New York needs $5.7 billion to keep roads in “good repair.” Watch the original segment here .
New York City should implement a 5-cent fee on paper carryout bags to discourage single-use waste and encourage the use of reusable alternatives. This policy, which exempts SNAP and WIC recipients, aims to reduce the environmental impact of plastic bags that currently cost the city $12.1 million annually to landfill.
Recommendations related to Excise Taxes
The City should adopt the paper carryout bag fee to realize the fiscal and environmental benefits of sharply reducing the number of single-use bags from the waste stream.
The City should support legislation to authorize the 5-cent fee on most paper carryout bags, which would take effect on March 1, 2020, concurrent with the statewide plastic bag ban.
Key Data
$12.1 million
— Annual cost to landfill plastic bags in New York City.
71,000 tons
— Amount of plastic bags in the City's residential waste stream, representing about 2 percent of the total.
94 percent
— Reduction in single-use bags achieved in Los Angeles following a similar ordinance.
500 years
— Time it takes for plastic bags to decompose.
5-cent
— Proposed fee on most paper carryout bags.
New York's transportation infrastructure faces a significant funding shortfall, as current fuel taxes are eroding due to increased vehicle efficiency and the rise of electric vehicles. To address this, the state should implement new revenue sources, such as congestion pricing and a vehicle-miles traveled (VMT) fee, while considering short-term increases to existing motorist user fees.
Recommendations related to Excise Taxes
The Governor and legislature should develop and advance a comprehensive proposal this year, one that raises sufficient revenues to reduce transportation funding shortfalls and to support additional mass transit service to meet the needs of those drivers who choose to switch modes.
New York ought to prepare for the continued erosion of revenues, and it should consider user fees that supplement fuel taxes.
The State needs to begin the thoughtful process to develop a VMT fee.
Increasing fuel taxes, vehicle fees, and toll rates to those of New York’s neighbors can raise significant sums in the short-term.
Key Data
$3.6 billion
— Annual revenue collected from motorist user fees in fiscal year 2018.
$1.6 billion
— Total fuel taxes collected in fiscal year 2018 from two per-gallon taxes.
$66 million
— Estimated annual revenue from a 1 cent per gallon increase in the Motor Fuels Tax.
17 percent
— Decrease in the amount of fuel tax per mile driven in New York since 1993.
$1.5 billion
— Revenue collected from motor vehicle fees in fiscal year 2018.
$450 million
— Total revenue from other motorist taxes, including highway use taxes and auto rental taxes, in fiscal year 2018.
The 10-Point Plan to Transform and Fund the MTA proposes using revenue from new internet sales taxes and excise taxes on marijuana to support the system. These potential revenue sources are currently uncertain and should be allocated through the standard budget process rather than being earmarked in statute.
Recommendations related to Excise Taxes
Revenue from excise taxes on marijuana should be allocated through the budget process rather than being earmarked in statute.
Legalizing recreational marijuana offers the potential for significant tax revenue, but states often face implementation delays and market challenges that make early revenue projections highly speculative. New York should approach these potential funds with caution by avoiding optimistic budgeting, ensuring revenues are managed on-budget, and directing proceeds toward general operating purposes rather than specific programs.
Recommendations related to Excise Taxes
Recreational marijuana revenues should not be included in the State financial plan until the very complicated steps of crafting the statute and regulations have been completed; budgeting should not rely upon best guesses or optimistic assumptions.
Any future revenue should be received and spent on-budget, not through off-budget trusts or other fiscal gimmickry.
The revenue should not be committed to a specific purpose.
If New York does implement such a program, the associated revenue must be cautiously forecast, transparently disbursed, and utilized for general state operating purposes.
Key Data
$430 million
— Amount collected in Washington State from marijuana sales taxes in fiscal year 2017.
$82 million
— Actual tax revenue received by California in the first six months of legal recreational marijuana sales.
$185 million
— Projected tax revenue for California in the first six months of legal recreational marijuana sales.
$700 million
— Potential annual tax revenue from marijuana legalization in New York State according to a Department of Health study.
$110 million to $428 million
— Range of revenue estimates for a hypothetical marijuana excise tax in New York.
$33 million
— Estimated reduction in New York State's alcohol tax revenues due to legalized marijuana consumption.
New York City should implement a ban on plastic bags combined with a fee on alternatives to effectively reduce waste, as simple bans often fail to change consumer behavior. Such economic incentives have proven successful in other jurisdictions, leading to significant reductions in single-use bag consumption at a low cost per resident.
Recommendations related to Excise Taxes
The City should act again on this issue and a local ban on plastic bags, coupled with a fee on alternatives, should be adopted.
Key Data
2%
— Plastic bags make up about 2% of the City’s residential waste stream.
71,000 tons
— There were about 71,000 tons of plastic bags in the waste stream.
$12.1 million
— Plastic bags are landfilled at a cost of $12.1 million each year.
5 cents
— Local Law 63 of 2016 established a fee of at least 5 cents on carryout bags.
94%
— A similar effort in Los Angeles led to a 94% reduction in single-use bags.
$4
— A similar effort in Los Angeles cost less than $4 per resident per year.
New York's Health Care Reform Act (HCRA) taxes, which generate over $4.3 billion annually, rely on regressive surcharges on health insurance premiums and hospital revenues that disproportionately burden lower-wage workers. These taxes should be replaced with broader, more equitable revenue sources, and the state's funding mechanism for graduate medical education requires a comprehensive re-evaluation to ensure fairness and efficiency.
Recommendations related to Excise Taxes
The Legislature should think creatively about how to replace the HCRA taxes in future budgets rather than continuing to renew them.
The State should shift the financing of health care programs to broader based taxes, such as the income tax or sales tax, to lower health insurance premiums and ease the burden on lower-wage workers.
Policymakers should explore alternative waivers or special provisions to retain federal Medicaid funding while shifting the hospital surcharge to a more progressive revenue stream.
Any money the State allocates to graduate medical education should be raised from a tax levied uniformly across the State rather than through differential regional tax rates.
The Governor and the Legislature should re-evaluate the nature and scale of the State’s commitment to graduate medical education.
Key Data
$4.3 billion
— Total annual yield from the two major taxes authorized under the Health Care Reform Act.
$3.2 billion
— Total annual yield from the hospital revenue surcharge.
$1.1 billion
— Annual yield from the Covered Lives Assessment tax on commercial health insurance.
$500 million
— Amount of federal financing for the Medicaid portion of the hospital revenue surcharge.
$10 billion
— Total annual federal Medicare support for graduate medical education nationwide.
$2.1 billion
— Annual federal Medicare support for graduate medical education in New York hospitals.
A proposed moratorium on a 5-cent plastic bag fee in New York City should be vetoed to allow the fee to proceed, as it aims to reduce the disposal of 10 billion bags annually. This fee, which exempts low-income residents, is intended to lower the $12.5 million cost of waste disposal and mitigate environmental damage.
Recommendations related to Excise Taxes
The Governor should veto A.04883/S.04158, which would place a moratorium on the 5-cent plastic bag fee.
Key Data
10 billion
— Number of plastic bags disposed of in New York City each year.
$12.5 million
— Annual cost to New York City for disposing of plastic bags.
50 percent
— Decline in plastic bag usage observed in Washington, D.C. following the implementation of a similar fee.
5 cent
— Amount of the fee on certain plastic bags in New York City.
NY1 Thanks to the surge of car services like uber, fewer and fewer people are taking yellow cabs—and it's just not cabbies who are feeling the pinch. The decline has real implications for the city's transit system, which received fifty cents for every cab ride.
New York City's transportation sector, including taxis and ride-hailing services, faces potential tax reforms to help close the Metropolitan Transportation Authority's $2.6 billion capital funding gap. By expanding per-ride taxes to all for-hire vehicles or reforming existing sales taxes, the city could generate significant new revenue to support essential transit infrastructure.
Recommendations related to Excise Taxes
The city should expand the 50-cent per-ride taxicab tax to include all black car and Dispatch Service Provider trips to ensure all transportation services contribute to the MTA's capital funding.
Policymakers should update the per-ride tax to a percentage of the fare (specifically 3.95%) rather than a flat 50-cent fee to better reflect the higher fares of black car and ride-hailing services.
The state and city should reform the transportation sales tax by lowering the burden on black cars and dedicating the entire revenue stream to the MTA to help close the capital funding gap.
Key Data
$2.6 billion
— The remaining capital funding gap for the Metropolitan Transportation Authority that needs to be filled.
$250 million
— The estimated total tax revenue generated by TLC-regulated transportation services in 2015.
$33 million
— The additional revenue that would have been raised in 2015 by applying the 50-cent per-ride tax to all black car and Dispatch Service Provider trips.
$70 million
— The additional revenue that would have been generated in 2015 if a 3.95% tax rate were applied to black car and Dispatch Service Provider trips.
$225 million
— The potential increase in MTA revenue by 2019 if a reformed transportation sales tax were implemented.
The Metropolitan Transportation Authority faces a $19 billion funding gap for its five-year capital plan, requiring a shift in how transportation is funded. To address this, policymakers should implement a combination of a vehicle-miles-traveled tax and rational tolling to ensure drivers cover 25% of mass transit costs.
Recommendations related to Excise Taxes
The State of New York should create a new revenue stream to support borrowing that fills the gap in the capital plan and contributes 25% of the MTA’s operating costs, specifically by implementing a vehicle-miles-traveled (VMT) tax and more rational tolling.
The State of New York should adopt a funding model where motor vehicle cross-subsidies cover 25% of MTA mass transit costs.
Elected leaders should implement, over a period of years, some combination of a VMT tax and more rational tolling to sustain and improve transportation facilities.
Key Data
$32 billion
— The amount the Metropolitan Transportation Authority needs over the next five years to repair, replace, and improve its facilities.
$13 billion
— The amount of funding the Metropolitan Transportation Authority currently has available for its five-year capital needs.
$19 billion
— The funding gap the Metropolitan Transportation Authority faces for its five-year capital plan.
11%
— The current portion of MTA mass transit costs covered by drivers through bridge and tunnel tolls, state license and registration fees, and gasoline taxes.
25%
— The recommended portion of MTA mass transit costs that should be covered by motor vehicle cross-subsidies.
$2.1 billion
— The total needed new revenue annually from motor vehicle user fees to support borrowing and operating costs.
NY1 Drivers could be paying more to help fund mass transit if one non-profit group gets its way. The Citizens Budget Commission is proposing a number of fees on cars and trucks to help the MTA close a $1 billion gap in its capital investment program.
The Metropolitan Transportation Authority requires a new funding strategy to address a $15 billion budget gap, which can be achieved through a "25-50-25" model relying on tax subsidies, user fees, and cross-subsidies from motorists. Implementing mechanisms like increased gasoline taxes, registration fees, and congestion-based vehicle-miles-traveled taxes would align funding with those who benefit from the transit system.
Recommendations related to Excise Taxes
The state should implement increases in existing tolls, license and registration fees, and the gasoline tax to help close the MTA's funding gap.
Policymakers should consider the Move New York plan, which features a newly designed vehicle-miles-traveled tax that charges vehicles based on road usage and congestion levels.
Key Data
$15 billion
— The size of the MTA's budget gap that requires new funding sources.
$167 to $293
— The range of increased annual costs motorists would face under the proposed vehicle-miles-traveled tax.
$2.75
— The projected cost of a single-ride subway fare by 2016.
The state should eliminate the temporary 2 percent utility surcharge for industrial customers immediately and accelerate its phase-out for all other users to enhance economic competitiveness. This surcharge, imposed on electric, gas, water, and steam utilities, has been a burden on businesses that are large power users.
Recommendations related to Excise Taxes
The Executive Budget should eliminate the utility surcharge immediately for industrial customers to improve economic competitiveness.
The state should accelerate the phase-out of the utility surcharge for all other customers to improve economic competitiveness.
Key Data
2 percent
— The temporary surcharge levied on electric, gas, water, and steam utilities since 2009.
New York faces a significant fiscal gap, and the proposed budget relies on $5 billion in new revenue measures that should be reduced to no more than $2 billion to avoid discouraging economic activity. Many of these revenue proposals, such as a tax on non-dietetic soft drinks and assessments on insurance companies, are effectively tax increases that burden consumers and should be replaced with structural spending reforms.
Recommendations related to Excise Taxes
The budget adopted by the Legislature should reduce the Governor's proposed $5 billion in new revenue measures to no more than $2 billion to avoid excessive reliance on increased taxes.
The Legislature should replace the $679 million of health care savings that stems from "assessments" (meaning taxes) on insurance companies that will be passed on to consumers across the State.
The State should avoid harmful tax increases that curtail economic activity and add to the already high cost of doing business in New York.
Key Data
$404.0 Million
— The projected revenue from the proposed non-dietetic soft drink tax.
$19.0 Million
— The projected revenue from the proposed tobacco retail license fee increase.
$1,864.2 Million
— The total amount of mis-categorized revenues in the gap-closing plan, which includes various taxes and fees.
$5 Billion
— The amount of new revenue measures proposed in the Governor's Executive Budget.
Expanding gambling opportunities to fund education carries significant risks, including the potential for long-term revenue instability and the imposition of social costs estimated at $1.1 billion annually. Furthermore, gambling revenues function as a regressive tax, disproportionately impacting lower-income residents, and require strict regulatory measures to mitigate associated social harms.
Recommendations related to Excise Taxes
Implement age restrictions for participation in gambling activities to mitigate social costs.
Enforce the exclusion of individuals from gambling venues to reduce the prevalence of problem gambling.
Establish a limitation on the dollar amount of bills that machines will accept to curb excessive gambling behavior.
Require that the state pay out winnings over a certain amount by check to discourage immediate reinvestment.
Impose limitations on the number, location, and maximum withdrawals of ATMs at gambling facilities to control spending.
Key Data
$1.1 billion
— The estimated annual social cost of gambling in New York State.
$2 billion
— The amount of annual receipts the Executive Budget projects from video lottery terminals in five years.
$9 billion
— The estimated annual spending on legal gambling in New York State combined with casino gambling by New Yorkers.
$2,945
— The estimated annual cost to society of a problem gambler.
$10,330
— The estimated annual cost to society of a pathological gambler.
$5.4 billion
— The total amount of lottery ticket sales in 2003.
The New York-New Jersey metropolitan region's transportation system faces significant financial instability, with mass transit agencies incurring an aggregate operating deficit of approximately $1.2 billion in 2001. To address these challenges, the region should implement a unified policy that dedicates motor vehicle user fees—including fuel taxes—to transportation purposes and requires mass transit fares to cover half of operating costs.
Recommendations related to Excise Taxes
The governors of New York and New Jersey should create a new entity with authority to set and enforce regional transportation policies and priorities.
Motor vehicle user fees should be dedicated to transportation agencies for two purposes: to cover the operating costs of roads and bridges, and to provide a cross-subsidy to mass transit of one-quarter of mass transit costs.
Mass transit riders should pay a fare sufficient to cover one-half the transit agencies’ operating costs.
The existing backlog in maintenance and repairs caused by a history of under-funding and neglect should be eliminated at an accelerated pace and be financed by general fund appropriations.
New capital for improvements and expansions should be generated by borrowing to be repaid in the same manner as identified above for meeting current operating expenses, and ensuring that contributions to capital from third parties are used for this purpose.
Key Data
$5.7 billion
— Total user fees collected from auto users in the region.
$2.0 billion
— Amount collected in motor fuel taxes from auto users.
$1.2 billion
— Aggregate mass transit operating deficit in the region.
14.5 cents
— Fuel tax per gallon in New Jersey.
22 cents
— Fuel tax per gallon in New York.
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