Malloy to sign gas tax circuit breaker next week

Gov. Dannel P. Malloy will sign the new gasoline tax circuit-breaker bill into law Tuesday, the governor’s office announced Friday afternoon.

“We are all very concerned about the national rising cost of gasoline and its impact on Connecticut residents, businesses and the state’s economy as a whole, especially as the summer driving season approaches,” Malloy said.

“I want to be clear that although this is not going to provide consumers with the type of relief they need and expect, it will slow the rise in cost at a time when our residents need it,” Malloy said. “But what we really need to do as a state and a nation is move toward policies that lead us in the direction of energy independence.”

Both chambers of the General Assembly unanimously adopted a measure this week that would freeze wholesale fuel taxes for the next 15 months, giving some protection to consumers who pay the nation’s highest gasoline taxes and some election-year cover to state legislators.

But majority Democrats in both chambers also rejected Republican amendments to cancel a gas tax hike slated to take effect in July 2013. While the circuit-breaker will shave about 1.4 cents off the state’s fuel tax burden, the next tax increase would add nearly 4 cents per gallon.

The petroleum products gross receipts tax is slated to rise by one-sixth in 15 months, imposing an effective rate of 8.81 percent on wholesale purchases and collecting an extra $55 million for state government, according to nonpartisan legislative analysts. The circuit-breaker that was adopted Wednesday will save consumers about $5 million per year.

The state has two taxes on gasoline — one responsive to usage, the other to price.

The state imposes a fixed, 25-cents-per-gallon tax when consumers fill up. But first the gross receipts tax adds another 7.53 percent to the cost of gasoline — an expense built into the price paid by motorists. Based on the average wholesale price recorded last week — $3.18 per gallon — the wholesale tax adds another 24 cents per gallon.

Connecticut’s combined 49 cents per gallon tax ranks first among all states.

According to the Connecticut AAA, the average retail price of regular gasoline Friday stood at $4.08, a price topped by eight other states and the District of Columbia.