Connecticut motorists will begin paying a retail gas tax Sunday for the first time since late March — but it’s only going to be a nickel-per-gallon for the next month.
Starting Jan. 1, the state will begin the gradual restoration of its 25-cents-per-gallon retail tax, a process that will take four months. The tax will climb to 10 cents starting Feb. 1; 15 cents on March 1; 20 cents on April 1; and reach 25 cents on May 1.
The head of the state’s largest association of gasoline dealers praised Gov. Ned Lamont and the General Assembly Friday for deciding last month to roll back the tax holiday in stages.
“Phasing it in makes it much easier than just adding [back] 25 cents,” said Michael Fox, executive director of the Connecticut-based Gasoline & Automotive Service Dealers of America, which represents roughly 500 stations.
Besides eliminating a sharp cost hike for consumers, it also spares stations from false accusations of price-gouging from those who forget when the holiday is supposed to end, Fox said.
The program delivered about $270 million in relief to Connecticut motorists from April 1 through through November 30, and that tally will rise to $330 million before the tax discounts disappear entirely four months from now, according to state budget analysts. More importantly, advocates say, it offered relief when the Russian invasion of the Ukraine and other global factors were pushing prices sky-high.
The AAA Northeast reported an average retail price for regular gasoline Friday in Connecticut at $3.15 per gallon, while the average wholesale cost at New Haven Harbor — the single-largest fuel-importing site in the state — was $2.39.
When Lamont and lawmakers were negotiating a tax holiday back in mid-March, the retail price stood around $4.40 per gallon while the wholesale cost was about $3.40.
Retail prices rose throughout much of the spring and peaked in Connecticut, according to AAA, at $4.98 per gallon on June 14.
The state does have a second tax that affects the price of gasoline, which was not suspended or discounted this past year.
Connecticut imposes an 8.1% wholesale tax when fuel is sold to local gasoline stations. A state-approved surcharge effectively boosts that rate to 8.81%, and stations routinely build the cost of that tax into the retail price they charge to motorists.
Based on the current, average wholesale price of $2.39, this tax translates into about 21 cents per gallon.