Gas Tax Scheduled To Increase This July
Although lawmakers from both parties voted last year to pin down one side of the state’s two-tiered gas tax, some are now seeking to avoid a slated increase on other side scheduled for this July.
Connecticut’s petroleum gross receipts tax on gasoline is based on a percentage of the current wholesale price of gas. Because the wholesale price fluctuates, the gas tax rate can be a moving target.
Last year, the legislature bowed to political pressure from Republicans and passed a bill which stipulated that capped the taxable portion of the wholesale gas price at $3 per gallon. But in July, the tax rate applied to the price of gas is slated to rise from 7.53 percent to 8.81 percent. The increase could generate about $60 million for the state.
In a Wednesday press release, House Minority Leader Lawrence Cafero said lawmakers should prevent the tax from rising. He said the state can find the funds somewhere else.
“We have the available resources in a number of areas of the state budget to prevent this gas tax hike. What we need now is the will to give taxpayers and drivers a break. The taxes on gasoline and diesel are too high as it is,’’ Cafero said.
The renewed scrutiny of the gas tax comes as lawmakers consider a budget proposal which diverts $80.7 million from the Special Transportation Fund — which the gas tax is meant to finance — to the General Fund in the next budget biennium.
On Friday as the Finance Committee was approving the budget legislation, Rep. Pamela Sawyer, R-Bolton, proposed an unsuccessful amendment to repeal the scheduled gas tax increase.
“It’s a frustrating way to manage the books,” Sawyer said Wednesday.
The state’s transportation fund was designed as a way to ensure money was available for the upkeep of transportation infrastructure, she said. But it’s become an easy raiding target when the General Fund runs low, Sawyer said. The state’s complicated gas tax, which increases when gas prices go up, can balloon the fund when gas prices get high.
“Whenever the wholesale price goes up the state gets a windfall,” she said.
Responding to Republican criticisms of the budget proposals moved by legislative committees last week, House Speaker Brendan Sharkey accused the minority party of intentionally marginalizing itself in a tough budget year when unpopular decisions would need to be made.
“All the things everybody loves to spend money on, [Republican leaders] were in favor of, all the things people are concerned about, they were against but they were not saying anything or presenting anything in the larger context,” he said.
Sharkey said he was “not completely comfortable” with raiding the transportation fund and would like to see it changed through negotiations with the governor’s office. Still, he did not think it should be considered a new tax because it has been scheduled since 2005.
“That’s something that was set in motion years ago for these automatic increases. I think there’s a lot of things we can look at and I think the gross receipts tax is one example, how we set these things in motion, but to say that we’re not eliminating the tax and therefore it’s a tax increase, I think that’s a little disingenuous,” he said.
In an attempt at being constructive, Cafero made suggestions on where the state could make up revenue that would be lost by scrapping the gas tax increase. They included scrapping the Earned Income Tax Credit, raiding the Rainy Day Fund, cutting $10 million from the Citizen’s Election Fund, and enacting a hard hiring freeze.