Cap The Gas Tax Now!

Connecticut currently has the highest price on the sale of gasoline in the Northeast, an unfortunate distinction for our state. Whenever prices rise politicians are quick to blame fluctuations in the oil commodities market, or tensions in the Middle East but they neglect to mention Connecticut has the highest price in gas simply because of the combined state and federal taxes they place on it.

Connecticut imposes two taxes on gasoline, a State Excise Tax and a tax called the Gross Receipts Tax, both of which are in addition to a federal gas tax.

The state’s excise tax holds at a steady rate of $0.25 per gallon. While that price seems high, overall the tax actually stays relatively even with the surrounding states.

What actually hurts Connecticut drivers the most is the state’s illusive gross receipts tax – a 7.53% rate on the gross earnings of the first sale of specific petroleum products within Connecticut.

While the excise tax stays at 25 cents per gallon, the amount collected from the gross receipts tax grows exponentially because it is a percentage of the wholesale price instead of a fixed rate.

Although, the state’s Gross Receipts Tax is collected at the wholesale level. The gasoline retailers who purchase the fuel from wholesalers ultimately pass the cost of the gross receipts tax they are forced to pay onto consumers.

As of the end of January, Connecticut tax-payers were paying an average of $3.68 per gallon according to AAA. The price includes the state’s 25 cents per gallon gas tax and roughly another 22 cents per gallon with the gross receipts tax.

Adding insult to injury, in addition to the recent spike in gas prices across the state, the gross receipts tax rate is also currently scheduled to increase from 7.53% to 8.1% in 2013.

The current uncapped fuel tax has provided state government with considerable “windfalls” in past fiscal years when fuel prices rose

Consumers are particularly frustrated because past windfalls were not spent on transportation programs or to clean up fuel contamination sites — the purposes most consumers expect when they hear about the tax. For example, 56 percent of the nearly $370 million in wholesale fuel taxes collected in the 2007-08 fiscal year was spent outside of these areas, even though our bridges and roads might need repairs.

There is no debating that the further rise of the price of gasoline in Connecticut will negatively affect every aspect of living and doing business in Connecticut. Shipping costs are one of the most costly line-items in a small business budget.

In the end, higher gas prices mean less fuel in the tank and less cash in the wallet. And while you suffer at the pump, Connecticut selfishly brings in more and more revenue.

The proposed legislation to cap the gross receipts tax whenever the wholesale price of gas hits $3 a gallon would have actually gone into effect on Monday February 13th, the first time the wholesale price hit $3.00 for a gallon of gas.

How can we expect to bring in any type of economic recovery when the price of gas will keep hitting our citizens harder and harder?

If you would like to comment on the gas tax or other issues of concern to you please do so by contacting my office at 1-800-842-1423 or visiting my website www.cthousegop.com. I would love to hear from you.