Minority Republicans in the state House and Senate called Thursday for suspension of the state’s wholesale tax on gasoline, until at least July 1.
The Petroleum Products Gross Receipts Tax currently adds 26.4 cents per gallon to the price of gasoline, but there’s no consensus at the Capitol on whether suspending that would translate into a matching amount of relief for motorists.
“Connecticut cannot afford this tax today,” Senate Minority Leader Kevin Kelly, R-Stratford, said, during a late morning press conference outside the Legislative Office Building in Hartford, right across the street from a gas station at the corner of Broad Street and Capitol Avenue. “This is, quite frankly, a no-brainer.”
The AAA Northeast reported an average retail price for regular unleaded gasoline Thursday at $4.48 per gallon in Connecticut — another all-time high.
Retail prices had crept north of $4.30 per gallon here in 2008, just before the worst months of the Great Recession.
With households routinely spending more than $40 to fill up one tank of gas, families are struggling to afford simple things like driving to work, said House Minority Leader Vincent J. Candelora, R-North Branford.
“They’re now faced with that decision: ‘When can I drive? Where can I drive?’” he said, adding that he believes lawmakers’ offices never have been more inundated with constituent concerns than those produced by the recent spike in fuel prices.
According to the Connecticut Energy Marketers Association, a coalition of major fuel distributors, the average wholesale price at New Haven Harbor — the single-largest fuel importing site in the state — hit $3.40 earlier this week. That’s 43% higher than it was to start the year.
The wholesale price rose 22% from the first to the second week of March alone as the Russian invasion of Ukraine continues to drive up fuel prices in much of the world.
Republicans said the full House and Senate should vote on their proposal as soon as next week, though it remains unclear whether the Democrats — who hold majorities in both chambers — will embrace this plan.
Kelly and Candelora said preliminary estimates are that a suspension of the tax through the end of June would cause the state to lose about $180 million in revenue. This gap could easily be covered, they added, given that the state budget’s General Fund is on pace to finish the fiscal year on June 30 roughly $2.5 billion in the black.
But not all officials in Hartford are convinced that consumers would be the chief beneficiaries of suspending the wholesale tax.
Gov. John Rowland and the legislature lowered the retail gasoline tax between 1997 and 2000 from 39 cents to 25 cents, but the initiative was plagued with complaints that motorists saw little to no relief in prices.
Some gas distributors didn’t pass the savings along to consumers. And even those that did still couldn’t guarantee savings at times when underlying fuel market costs continued to rise.
Senate President Pro Tem Martin M. Looney, D-New Haven, and Senate Majority Leader Bob Duff, D-Norwalk, wrote in a joint statement that their caucus continues to develop its own relief plan.
“Democrats have and will continue to push for policies that reduce the tax burden for middle and working class families while ensuring that the most wealthy and corporations pay their fair share,” Looney and Duff wrote.
Rep. Sean Scanlon, D-Guilford, co-chairman of the tax-writing Finance Committee, said Wednesday that he was open to any proposal that delivered relief to households and didn’t weaken the state’s highway and bridge maintenance program.
Gov. Ned Lamont, also a Democrat, echoed those points Wednesday on Twitter.
“We need to move immediately when it comes to gas prices,” Lamont said. “We need to do it right, without sacrificing our infrastructure.”
Connecticut actually has two state taxes that bolster the price of gasoline.
The gross receipts tax is percentage-based but with a capping mechanism. It applies an effective rate of 0.881% to the wholesale price until that price hits $3. Once the price exceeds that level, the tax still is calculated based on a $3 price, setting its ceiling at 26.4 cents per gallon.
Connecticut also has a flat, 25-cents-per-gallon retail tax.
Lamont’s Republican rival in the 2022 gubernatorial race, Bob Stefanowski, called Wednesday for suspension of both fuel taxes through the rest of the calendar year.
That would cost the budget’s Special Transportation Fund close to $500 million — about one-quarter of all annual revenue for the fund, which receives receipts from fuel taxes, various vehicle-related fees and a portion of the sales tax.