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Debate Over CT’s Hidden Gas Tax Begins

by Christine Stuart | Jan 6, 2012 12:38am
(5) Comments | Commenting has expired
Posted to: Transportation

CTNJ file photo

Sen. Len Suzio

A freshman senator from Meriden says he’s going to introduce legislation to cap the state’s gross receipts tax on gasoline.

For those unfamiliar with gas taxes, the gross receipts tax is often referred to as the “hidden” gas tax. Currently, the tax is 7 percent of the wholesale price of gas, and Sen. Len Suzio, R-Meriden, is proposing capping it once the wholesale price hits $3.

Connecticut also has a flat 25-cent-per-gallon state gas tax. The gross receipts tax adds about another 20 to 25 cents per gallon depending on the wholesale price of gas.

“When the wholesale price goes up, so does the hidden tax,” Suzio said. “Incredibly, there is no limit to how high the hidden gas tax may go. Connecticut already has the highest gas tax in the nation. I am proposing we put a cap on this hidden tax and give overburdened taxpayers a little relief at the pumps.”

Depending on the price of gasoline drivers in Connecticut pay roughly about 46 cents per gallon in gas taxes: 25 cents from the flat tax and 21 cents on the gross receipts tax. If you add the federal gas tax which is about 18 cents per gallon then Connecticut drivers are paying roughly about 64 cents in tax per gallon making it one of the highest gasoline taxes in the nation.

Asked about what he thought about the proposal to cap the gross receipts tax, Gov. Dannel P. Malloy said “let me remind everybody that New York, Massachusetts, New Jersey, Delaware, Maryland, all have tolls.”

“This is how we pay for transportation in the state of Connecticut and unlike other governor’s what I did in the last session and what I did in this budget was guarantee, every fuel tax dollar actually goes into transportation,” Malloy said.

Previous administrations and legislature’s funneled the money from the gas tax into the general budget where it would be used to pay for everything from operating costs to other state services.

Malloy said because of this shuffling of the money away from its intended purpose Connecticut did a really bad job of investing in its transportation infrastructure over the last 20 years. He vowed to break those bad habits.

“I didn’t create this problem,” Malloy said. “I got hired to straighten it out and that includes transportation.”

If there’s something the state can’t afford to give up right now it’s revenue, but Suzio isn‘t backing down from the fight. He started a petition drive to convince Malloy and other legislators to consider capping the state’s hidden gas tax.

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(5) Comments

posted by: Noteworthy | January 6, 2012  10:21am

Dan Malloy didn’t create our fiscal mess - but he sure contributed to it. As mayor, he demanded more and more from the state in dependency payments to Stamford, more transportation expense and more. He made payments to the League of Cities and others to lobby for higher taxes and more debt to fund his wish list. To sit here and now, and act like he didn’t have anything to do with anything that was going on in Hartford is like the kid with chocolate all over his face, telling his mother he didn’t eat the entire cookie jar full of chocolate chip cookies. It’s stupid and insulting for Malloy to keep saying things are fundamentally dishonest.

Moreover, Dan, you are lying about the gas taxes. 100% of them have never gone into transportation, and they don’t all go into transportation in your budget either. You only said 70% of them would. Malloy lies so much he can’t even remember what he said the last time.

One final point - I don’t care if all the other states have tolls. That’s not the issue either. We are a little state. We don’t NEED everything that Malloy says we do - things like the silly magic bus; and the obscenely expensive parking garage at the train station in New Haven.

Suzio should be applauded and the gross receipts tax should be flat. It used to be but then the Democrats in the dark of night, when they needed money and gas prices were climbing, changed it back to a percentage.

posted by: DirtyJobsGUy | January 6, 2012  2:30pm

Malloy’s clever statement that “all the tax goes to transportation” is typical Hartford Doublespeak.  He means the road user continues to subsidize train service from Stamford to NYC.

My memory may fail me but wasn’t the gross receipts tax originally tied to cleaning up buried fuel oil tanks? (Also the dems put in their favorite language about it not being passed on the the consumer)

posted by: Commuter | January 6, 2012  5:39pm

If memory serves, Stamford received a comparable percentage of state aid as many smaller communities in terms of education funding. Also, to suggest that Malloy should have refused to play by the rules then in effect, and to do less than whatever he could to increase revenues to his city, is to urge malfeasance and admire incompetence. No, Malloy is in fact not to blame for the mess he is now cleaning up. Also, Malloy has said again and again that the revenue streams that should have been going into transportation - and have been diverted into the general fund - are misappropriated funds, and he has set the course to correct that.
One final point - if you are going to get the facts wrong and misrepresent the man’s position and record, don’t be surprised if you are shown similar contempt.

Suzio is a troll and a demagogue. His proposal belies his pseudo populist rhetoric, and demonstrates his inability to think in terms of market forces. The gross receipts tax is a a tax on the suppliers of gasoline. If that tax is removed, all it will do is deprive the state of revenue we badly need to fix the roads and bridges, and raise the ceiling on what wholesalers can charge - what the market will bear. The gross receipts tax relieves individuals and small businesses of a portion of the burden of paying for infrastructure at the expense of excess profits that would otherwise flow to out-of-state corporations.

It would be nice if we lived in a Republican fantasy world where didn’t have to be responsible for anything and the bill never came due. But Republicans need to grow up and recognize that, as painful as it is, the only way to pay the tab is to pay the tab.

posted by: Noteworthy | January 7, 2012  8:36pm

Commuter:

Aside from talking all around my post instead of addressing yourself to the specific issues I raised, let me add these observations:

1. Malloy says not putting 100% of the gas taxes is to mis-direct them to the general fund. The current budget extends that practice and while it improves the track record, 100% of the gas taxes in fact, are not dedicated to transportation.

2. Stamford’s ECS funding is not the issue. It’s the sum total of all the demands Malloy made to the state directly or indirectly and which through politics and lobbying, resulted in the state going in debt or spending money it should not have spent. On one side of the fence, he demanded greater funds from the state and higher taxes; and now that he’s on this side of the fence, he now claims the state spent too much money and how dare they have manipulated the accounts the way they did. It’s duplicitous at best. In order to come up with the money he wanted, something else had to give. It’s that easy.

3. Your diatribe on Suzio is marginally coherent and while you strung a bunch of big words together, they don’t make much sense. There are no market forces involved in gas prices - there is the commodities market which is a scam to begin with, but making matters worse, is a tax at both the wholesale as well as the retail level.

You appear to think that not taxing residents twice for the same gallon of gas, will not result in lower gas prices, that somehow the wholesalers will charge the same. They will just have a larger profit margin.

I just don’t buy it. That’s just an excuse not to flatten the tax and give us relief.

posted by: Commuter | January 9, 2012  2:04pm

1. “100% of the gas taxes in fact, are not dedicated to transportation.”
See: “... and he has set the course to correct that.” It’d be nice if this toxic dump of a state government could be made pristine immediately and without pain, but it can’t.

2. ECS is an important indicator of the relatively light demand Stamford placed on the State for its operations (since it represents the principle form of operating funds transferred from state to most municipalities). But, if you insist, go get some numbers and back up your assertions. Be sure to deduct sales taxes, income taxes, and corporate taxes generated in Stamford that went into state coffers while you’re at it. There is nothing “duplicitous” whatsoever about what Malloy is doing.

3. “There are no market forces involved in gas prices - there is the commodities market…” Um. Right.
But, I’m talking about the fact that if a wholesaler has to pay $x for a gallon of gas, and the maximum price that retailers will pay for it is $y, then $y-$x is the gross profit, and this tax is about how much of that the wholesaler gets to keep. So, cutting this will not lower retail prices, it will simply funnel more dollars in profits from taxpayers (here I am intentionally equating profits with taxes) out of state.

My criticism of Suzio in simpler terms is this: He doesn’t understand the subject. He is just pounding the table. He isn’t arguing for the people of his district or this state, he is an ideologue.

If Malloy were a Republican - and there is plenty about what he has doing that Republicans can like - they’d be talking about running him for President. Unfortunately, in a GOP that takes Rick Perry and Ron Paul more seriously than Jon Huntsman, he’d have no shot at the nomination.