Democrats Reverse Themselves & Seek Permanent Gas Tax Cap
(Updated 8:19 a.m. Wednesday) The Senate and House are expected to take up a bill Wednesday to cap the gasoline gross receipts tax and more than a week after saying they would sunset the cap, Democratic lawmakers reversed themselves and decided to make the cap permanent.
The bill, which was still being drafted late Tuesday evening, will seek to cap the 7.53 percent tax when the wholesale price of gas reaches $3 per gallon. As of March 19, the wholesale price was around $3.18, which means the gross receipts tax was around 22 cents. Capping it at $3 will lower the price at the pump by about 1.3 cents, according the Independent Connecticut Petroleum Association.
Sen. Minority Leader John McKinney, R-Fairfield, said in a phone interview Tuesday night that he had not seen the language of the bill yet, but received a call from Senate President Donald Williams to inform him that it would be on the Senate agenda.
Republicans spent most of the summer and winter getting the public involved in the issue and with the public’s help were able to convince the Democratic majority earlier this month to consider legislation.
“This is a victory for the people of Connecticut who would be facing higher gas taxes,” McKinney said.
The issue, which has been raised by Republican lawmakers in the past, went largely unnoticed by the public because “it was a hidden tax,” McKinney said. “But when the price of gas went up so did the amount of money the state collected from it.”
Based on the average regular price per gallon, state gasoline taxes are close to 49 cents if you include the 25 cent excise tax. It goes up to around 67 cents when you add the federal gas tax of 18.4 cents.
With gas prices expected to rise this summer, McKinney said he’s confident the public will begin seeing a savings of anywhere between 7 to 10 cents per gallon.
In a press release Wednesday morning Democrats announced that they also had decided to make the cap permanent. When they initially released their proposal they said the provision would sunset after one year. Republicans were prepared to call for a permanent solution giving them an issue upon which to campaign this fall.
Under their original proposal the cap would have expired at the same time as the gross receipts tax was expected to go up to 8.81 percent. Democrats had argued they needed to sunset it after a year so make sure they had enough money to balance the state budget, which is currently running a $423 million deficit in fiscal year 2014. The legislation does not stop the gross receipts tax from climbing to 8.81 percent on July 1, 2013.
It’s unclear at the moment why they changed their minds, but national polls showing pain at the pump may have been a deciding factor. A Gallup poll shows 65 percent of the public worry a “great deal” about the price of gas.
Since the beginning of the year, the state has seen its wholesale price of gas go up 42 cents, twice as much as the gross receipts tax, “based purely on speculation” Williams said last week.
“That’s unacceptable. There’s no supply or demand issue driving that price increase. It’s pure Wall Street speculation,” he said.
But as a state lawmaker there’s nothing Williams or his colleagues at the state Capitol can do about market speculation.
The legislation to cap the gas tax will also include measures to prohibit profiteering by big oil companies and it will allow the state to go after companies it believes are gouging consumers.
The bill will also:
—Legislatively declare a 30-day period of petroleum market scrutiny by the departments of Energy and Environmental Protection and Consumer Protection in anticipation of further wholesale price spikes.
—Amends the petroleum profiteering statute (C.G.S. § 42-234 et seq.) to provide for investigations of price gouging whenever the wholesale price rises by 15 percent or more within 90 days (the wholesale price has increased 40 cents – more than 15 percent – in the past ninety days).
—Grants the commissioner of the Department of Consumer Protection authority to impose Unfair Trade Practice fines on large gasoline wholesalers and distributors who are in violation of profiteering laws.
—Puts a permanent circuit breaker on the gross receipts tax (GRT) on motor fuels at $3.00 per gallon wholesale, upon passage.
—Prohibits oil wholesalers and distributors (those who pay the gross receipts tax) from passing on anything purporting to be based on the tax for the portion of any sales price over $3.00 per gallon.
—Institutes similar profiteering protections in regard to home heating oil.