Rep. Yaccarino, Legislature Pass Cap on State’s Gross Receipts Tax

State Representative Dave Yaccarino (R-87) today joined his legislative colleagues and passed a bipartisan bill to cap the gross receipts tax on gasoline sparing the driving public further pain at the pump and reducing an onerous hidden tax that has plagued unknowing Connecticut drivers for years. He also proposed locking in the percentage rate.

During Wednesday’s session, legislative Republicans and Democrats came together to overwhelmingly pass S.B. 457, An Act Concerning A Cap on the Petroleum Products Gross Earnings Tax and Penalties for Abnormal Price Increases in Certain Petroleum Products.

Under the provisions of the bill, the gross receipts tax will be capped at 7.53% when gas reaches or exceeds $3 per gallon at the wholesale level. The bill passed today will provide even greater savings if prices continue to rise as predicted during the summer months. Currently the wholesale price of gasoline is $3.24 resulting in a tax of $.25 per gallon. The cap will not allow the tax per gallon to exceed $.225.

For example, if an individual puts 14 gallons in their gas tank twice each week the affect on each fill-up is as follows:

New law with tax cap = $3.16 per fill-up just for the gross receipts tax. If the wholesale price of gas reached $3.50 without the cap the gross receipts portion would be $3.69- or $.53 more- per fill-up If the wholesale price of gas reached $4.00 a gallon the tax without the cap would be $4.21- or $1.05 more- per fill-up

Over one year’s time the affect would be an extra $109.20 spent on just the gross receipts tax.

“By voting to cap the gross receipts tax today we showed that when act on the best ideas and come together as a legislature we can make positive change to help the people of Connecticut,” Rep. Yaccarino said. “Cutting this hidden tax will help drivers who depend on their cars to get from school and work, the men and women who use their vehicles to keep their businesses running. With gas prices expected to rise in the coming months this will clearly be a relief.”

For the past several years the Majority Party dismissed repeated calls from legislative Republicans for a permanent cap on the gross receipts tax, dismissing the ideas as gimmicks and unworkable. However, continued public pressure forced them to reverse course and bring the proposal forward this session and then, ultimately, to make the cap permanent.

The bill also limits price gouging during “abnormal market disruptions” such as when stress to an energy resource from weather conditions, acts of nature, failure or shortage of an energy source, strike, civil disorder, war, national or local emergency, oil spill, or other extraordinary adverse circumstances occur, and changes current petroleum profiteering statute to allow investigations of price gouging if wholesale gas prices rise by 15 percent in any 90 day period.