Legislature gives slight relief to gas prices
Gas prices: State lawmakers vote to freeze gross receipts tax on petroleum sales
The General Assembly on Wednesday unanimously created a ceiling on taxing wholesale gasoline transactions in an attempt to help consumers weather the recent rise in pump prices.
The bill's immediate relief for consumers, however, is only about one-and-a-half cents per gallon.
The 36-0 vote in the Senate and the 146-0 House ballot an hour later on a bill drawn up by majority Democrats was tacitly praised by Gov. Dannel P. Malloy, who promised to sign it.
"This proposal may be somewhat helpful in that it could potentially slow the increase of gas prices and so the governor is supportive," said Andrew Doba, Malloy's spokesman.
The bill would create a so-called circuit breaker, freezing the collection of the gross receipts tax on petroleum sales at the wholesale price of $3 per gallon. The wholesale price is currently about $3.19, an increase of about 43 cents in recent months.
The tax is 7.15 percent, or about 21.5 cents per gallon, but on July 1, 2013, it is scheduled to rise to 8.1 percent as part of a plan to pay for mass-transit improvements.
Republicans in both the House and Senate offered an amendment that would freeze the current gross receipts tax. Senate Minority Leader John McKinney noted that the scheduled penny per gallon hike next year would bring in an additional $55 million in the 2013-14 fiscal year.
"Do we really need that extra $55 million from the people of Connecticut for a gas tax increase, or can we do without it?" McKinney said.
"We have enough money to fund our transportation needs," McKinney said, noting that much of the gas-tax revenue gets "siphoned" into the General Fund rather than the Special Transportation Fund, which supports infrastructure programs.
But Democratic leaders said that it's premature to change the scheduled tax increase and that the matter could be addressed later on, based on up-to-date market information. The GOP amendment failed along party lines 22-14 in the Senate.
In reaction, Republicans charged that consumers would be on track for paying higher taxes than necessary next year.
House Minority Leader Lawrence F. Cafero Jr., R-Norwalk said the scheduled increase in the gross receipts tax amounts to more than 15 percent over the current level.
"Anyway you slice it, folks, it's a tax increase," Cafero said, offering the House version of the Senate amendment, which quickly failed in a partisan 94-53 vote.
Under the legislation, the gross receipts tax, which is passed on to motorists at the pump, would not be levied on wholesale transactions above $3 a gallon. The state also has a 25-cents-per-gallon sales tax at the pump.
In 2011, the gross receipts tax generated more than $334 million, with $165 million transferred to the Special Transportation Fund.
"In this bill, we are doing more than capping the wholesale price to which the gross receipts tax is applied," said Senate Majority Leader Martin M. Looney, D-New Haven. "We are trying to deal with this issue of volatility as best as we can."
Sen. Michael McLachlan, R-Danbury, credited the bill's drafting and passage with recent Republican petitions requesting lawmakers to lower gasoline prices.
Sen. Antonietta Boucher, R-Wilton, said that since Connecticut is the only state in the nation to have a gross receipts tax in addition to the 25-cent-per-gallon excise tax, consumers needed a big break. "This is certainly a step in the right direction for our beleaguered taxpayers," she said.
Sen. L. Scott Frantz, R-Greenwich, agreed that pressure from state residents forced the Legislature to act so quickly in the session, which ends May 9. He said that like many of the nearly 370 state taxes, the gross receipts tax is a hidden levy.
"You don't think of that when you go into the gas station when you fill up your car with 15 or 20 gallons worth of gasoline," Frantz said.
The Senate debate lasted about 75 minutes.
The legislation would combat profiteering and price gouging, declaring a 30-day period of "market scrutiny" for officials at the Department of Energy and Environmental Protection and the Department of Consumer Protection to probe industry tactics.
The agencies would have until mid-April to create enforcement plans and allow for investigations whenever the wholesale price of gas or home heating fuel rises by more than 15 percent over a three-month period.
During the last three months, the increase in wholesale gasoline prices has exceeded 15 percent.
"Unfortunately, high gas prices are hurting everyone in the state," said Rep. Joseph J. Taborsak, D-Danbury, co-chairman of the General Law Committee, who introduced the legislation to the House under the General Assembly emergency rules. "People need some relief at the pump and they won't be getting it from Big Oil or Wall Street speculators."
"This is a good day," Cafero said. "There is nothing more directly hurtful than this gas tax," he said. "We're going to cap one part of it."
Doba, speaking for Malloy after the late-afternoon House vote, said that much of the state's gasoline prices are out of the control of state government. "And what we do have control over won't provide the kind of impact people need and expect," Doba said. "We need to be realistic about the limitations of what this legislation will achieve. What we really need are state and national policies that move us toward energy independence."