Bill to exempt N.Y. tugs from tax vetoed

Bill to exempt N.Y. tugs from tax vetoed    New York’s tug-and-barge industry has suffered a setback in an efforts to win a tax exemption aimed at leveling the playing field with out-of-state competitors.
   American Waterways Operators said Gov. Eliot Spitzer on July 3 vetoed a bill that would have given the New York towing companies an exemption from a petroleum business tax, despite broad support for the measure in the New York legislature.
   The tax is only collected on New York State companies operating in New York waters, and raises their costs, said Chris Coakley, Atlantic region vice president of American Waterways Operators.
   The result is that a New York-based company pushing a barge from Staten Island to Albany would have a higher cost than a company from, for example, Louisiana, doing the same job.
   Coakley said New York State believes towing companies need to pay $3 million to $5 million per year in the petroleum tax, though he said there is uncertainty about in which waters the tax applies.
   The AWO believes the explanation given for the veto is flawed. It said Spitzer's staff interpretation of A.7031 was that the bill would create a “detrimental effect on in-state (fuel) businesses” because “fuel purchased in-state and consumed in-state would be taxed, while fuel purchased out-of-state and consumed in-state would not.”
   But AWO said there are no vendors of heavy fuels for use by tugboats in New York, and that the veto is protecting “a nonexistent state commercial marine fuels industry at the expense of the vibrant tugboat industry which does reside in New York.”
   Also, since the fuel tax is a user tax, AWO argues it should not matter where the fuel is sold.
   The tugboat industry serving the Port of New York and New Jersey is concentrated on the north side of Staten Island along the Kill Van Kull in an area popularly known as “tugboat alley.”
   AWO said the bill Spitzer vetoed used the same language that provides fisheries with an exemption from the tax, and AWO said no detrimental effect has materialized due to that industry’s exemption.
   “Tugboats are the last major industry without an exemption or modal equity for paying the” tax, AWO said. Commercial fisherman, passenger commuter ferries, manufacturers and farmers are already exempt from the tax while railroads and airlines enjoy a reduction of the tax, which is half the rate that tugboats pay, the organization said.
   AWO is planning to continue its efforts to eliminate or reduce the petroleum tax for the towing industry.