State Representative Selim Noujaim (R-74) today voted to cap the gross receipts tax on gasoline sparing the driving public further pain at the pump and reducing an onerous hidden tax that has plagued unknowing Connecticut drivers for years. The veteran legislators also proposed locking in the percentage rate.
During Wednesday’s session, legislative Republicans and Democrats came together to overwhelmingly pass S.B. 457, An Act Concerning A Cap on the Petroleum Products Gross Earnings Tax and Penalties for Abnormal Price Increases in Certain Petroleum Products.
Under the provisions of the bill, the gross receipts tax will be capped at 7.53% when gas reaches or exceeds $3 per gallon at the wholesale level. The bill passed today will provide even greater savings if prices continue to rise as predicted during the summer months. Currently the wholesale price of gasoline is $3.24 resulting in a tax of $.25 per gallon. The cap will not allow the tax per gallon to exceed $.225.
For example, if an individual puts 14 gallons in their gas tank twice each week the affect on each fill-up is as follows:
New law with tax cap = $3.16 per fill-up just for the gross receipts tax. If the wholesale price of gas reached $3.50 without the cap the gross receipts portion would be $3.69- or $.53 more- per fill-up If the wholesale price of gas reached $4.00 a gallon the tax without the cap would be $4.21- or $1.05 more- per fill-up
Over one year’s time the affect would be an extra $109.20 spent on just the gross receipts tax.
For the past several years the Majority Party dismissed repeated calls from legislative Republicans for a permanent cap on the gross receipts tax, dismissing the ideas as gimmicks and unworkable. However, continued public pressure forced them to reverse course and bring the proposal forward this session and then, ultimately, to make the cap permanent.
“Today we showed that the people of our state truly have a voice in the legislature,” Rep. Noujaim added. “This cap will alleviate some of the pain at the pump and help everyday citizens budget their finances a little better, especially with the summer driving season starting soon and the potential for gas prices to go even higher. While we can’t control the overall cost of gasoline, at least the taxes will be held steady.”
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.