State Representative Mike Alberts today voted for a permanent cap onConnecticut’s Gross Receipts Tax, a 7.53 percent tax rate on the wholesale price of gasoline. The cap, which is now marked at $3-per-gallon, will provide relief for consumers as the price of gasoline is expected to rise in the upcoming summer months.
Senate Bill 457, An Act Concerning A Cap On The Petroleum Products Gross Earnings Tax And Penalties For Abnormal Price Increases in Certain Petroleum Products, passed unanimously on Wednesday marking a victory for Republicans such as Alberts, who has advocated for this legislation for several years.
Recently, Democrats embraced the concept they once opposed and purposed just a year-long cap to the “gross receipts” tax. Days later, after pressure from lawmakers such as Alberts, Democrats agreed upon the permanent cap called for by Republicans.
“High gas prices are strenuous on our families and our small businesses,” said Alberts. “In this tough economy, it’s important we do what we can to try and combat the rising price of gasoline – rather than increase it. After many long years of pushing for this legislation, I am grateful the legislature could finally come together and agree to cap this tax.”
The per-gallon tax total paid at the pump represents three separate taxes. First, there’s the federal tax— 18.4 cents. Next, there’s a fixed 25-cent state tax. Then, there’s a state “gross receipts” tax levied as a percentage of the wholesale price. The rate is 7.53 percent, costing consumers roughly 25 cents per gallon—a figure that increases every time the price of gas rises, giving the state more and more revenue.
Rep. Alberts and Republicans attempted to lock that percentage, which is scheduled to increase to 8.1 percent next summer. Majority lawmakers, however, voted down the proposal 94-53.
The percentage increase in 2013 would bring the state roughly $55 million in new tax revenue.
While Alberts was pleased an agreement on the cap was finally reached, he stressed the importance of capping the percentage rate of the tax as well.
“We need to remember that this is only a short term solution to a long-term problem,” said Alberts. “An increase in the percentage rate that is scheduled to come next year will put our economy in an even worse position than we are in now. MakingConnecticut’s economy productive again will take lowering our taxes on gas.”
In the past, the gross receipts tax was used to fund transportation-related projects and upgrades, but over the years the fund has been raided to support general government spending increases.
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.