Though taxes would rise on many households and businesses under the new state budget that legislators sent to Gov. Dannel P. Malloy, Connecticut’s trucking industry and other diesel fuel consumers will see some relief at the pumps this summer.
The diesel fuel tax, which is fixed annually each summer to reflect wholesale fuel trends, will drop 4.2 cents per gallon, down from 54.5 to 50.3 cents, on July 1, the Department of Revenue Services reported last week.
And though this marks the second, consecutive annual drop in the diesel levy, Connecticut’s rate still ranks as one of the nation’s highest. According to the Federation of Tax Administrators, a national organization of state tax officials, only Pennsylvania, which taxes diesel at 64.2 cents per gallon, ranks higher.
“Labor and fuel are truckers’ biggest expenses,” said Michael J. Riley, president of the Motor Transport Association of Connecticut. “The drop in the rate of this tax is a big deal. The reduction of costs from dropping this tax will go right to a very thin bottom line in thousands of Connecticut businesses.”
The legislature fixed a complicated formula in law in 2008 that sets the diesel rate each July based on an analysis of wholesale price changes in both diesel fuel and gasoline during the prior 12 months. Prices for both types of fuel are down over the past year.
The diesel rate also dropped — albeit marginally — one year ago, from 54.9 to 54.5 cents per gallon last July. But that had been preceded by three consecutive increases that added a total of 12.3 cents to the diesel rate between 2011 and 2013.
“The tax is still dramatically out of whack with other states,” said Riley, whose association represents more than 800 trucking and trucking-related businesses in Connecticut. The group favors capping the diesel tax at 50 cents per gallon, and Riley added the association would like the General Assembly to consider this option in its 2016 session.