Governor of New York Proposes Tax Hike Following Abandonment of Congestion Pricing Toll Proposal

Governor Kathy Hochul sparked controversy on Wednesday by halting a plan to impose high tolls on Manhattan drivers to combat New York City’s traffic issues, much to the dismay of environmentalists and public transit advocates but to the satisfaction of suburban commuters.

The next day, Hochul was working to gather support for her alternative proposal to raise a business tax in order to make up for the expected $1 billion annual revenue from the tolls for the struggling subway system.

Hochul’s efforts to gain legislative approval for the tax hike came after she unexpectedly halted the long-awaited “congestion pricing” toll program just before its scheduled launch on June 30.

The Legislature, which is nearing the end of its annual session, would need to approve the tax increase on city businesses, known as a payroll mobility tax, but it did not seem to have much support.

Criticism of the proposal came from various quarters, with Senator Zellnor Myrie calling the idea of raising taxes on New Yorkers while claiming to care about the cost of living “incomprehensible.”

Congestion pricing, which had been signed into law by former Governor Andrew Cuomo, faced challenges due to its financial burden on residents amid economic uncertainties and recovery from the pandemic.

The tolls on Manhattan drivers, which were expected to raise significant revenue for transportation projects, were put on hold as the debate over alternative funding sources intensified.

The future of the proposed business tax remains uncertain, with concerns about its impact on workers and the economy being raised by lawmakers and experts.

Before the unexpected decision to pause congestion pricing, Hochul had been a strong advocate for the program, highlighting its benefits just weeks before facing opposition from various groups.