Thursday, 28 July 2011

Could payroll tax be cut in exchange for New York traffic pricing?

Could congestion pricing for New York return because of a deal to use the idea not for new revenue, but to replace an existing tax. A Gotham Gazette report claims a group of New York state Republican senators want to drastically cut back the payroll tax that helps pay for public transport. This would make it acceptable for them to support tolls on the East River bridges as a replacement source of revenue, and to help ease congestion in Manhattan.

The payroll tax applies to New York City and the counties serviced by the New York MTA including Putnam, Westchester, Rockland, Orange, Suffolk, Dutchess and Nassau. The tax raises US$1.34 billion annually for the MTA. The tax is at US$0.33 cents on every $100 dollars paid by employers, but it is unpopular with many employers who say their employees and businesses do not benefit from the public transport services concerned.

Sen. John Bonacic has introduced a bill that would do away with the payroll tax in all counties except New York City. He would allow (but not demand) the New York City Council to set tolls on the East River Bridges: the Brooklyn Bridge, the Manhattan Bridge, the Williamsburg Bridge and the Ed Koch Queensboro Bridge of between US$2.50 and US$5.

Some concerns are:
- The toll might be too low, reducing the total amount of money available to the MTA; and
- The MTA needs new money, so it shouldn’t be about replacing an existing tax.

However, given Republicans opposed the Bloomberg congestion charge plan, this one which would have a similar effect, but as a tax replacement should have more traction. Then issues about raising money and how the MTA spends money can be addressed in parallel, whilst New York benefits from reduced congestion.

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