In response to rising gas prices, Connecticut lawmakers are set to cap taxes on gasoline in an attempt to mitigate the burden on consumers.
Following a Wednesday rally in Hartford by Republican state legislators in favor of their bill to cap the state’s gas tax, Democrats in the General Assembly devised their own bill that would cap the gross receipts tax at $3 per gallon wholesale. If the bill passes both chambers, it will be designated as an “emergency-certified” bill and will be fast-tracked to Gov. Dannel Malloy for his signature. As the average price of a gallon of gasoline in Connecticut rose to $4.05 on Tuesday, both Democrats and Republicans said the new bill may alleviate the financial burden on state residents.
“At this point, we don’t know how high the prices will soar,” said state Senate Majority Leader Martin Looney, Democrat of New Haven. “We want to make sure we do all we can do.”
With a tax cap proposal from each party under consideration, the differences lie in the duration of the caps proposed by the bills. The Democrats call for a yearlong cap, while the Republican draft calls for an indefinite cap. Additionally, the Democratic proposal includes a statute calling for the protection of consumers against “the price gouging and profiteering of big oil companies,” Looney said.
Some opponents of the Democratic proposal criticized the consumer protection measures as a “diversionary tactic,” diverting attention away from the fundamental crux of the issue. Republican state Sen. Rob Kane said that Connecticut is already one of the highest-taxed states in the country and strongly urged the Democrats to enact a gas tax cap in a bipartisan manner.
“Democrats never saw a tax they don’t like,” Kane said. “But we need some help and relief right now. We don’t want to wait any longer.”
According to research done by the Independent Connecticut Petroleum Association — a lobby of local fuel oil dealers and gasoline distributors — consumers will save about 1.4 cents per gallon from a capped gas tax at current wholesale prices. Despite this relatively low savings per gallon, state Rep. Gary Holder-Winfield, Democrat of New Haven, said that the bill will have varying degrees of impact across different income levels, adding that without passage of a gas tax cap, it will be more difficult for low-income people to afford gas. Kane, despite acknowledging the limitations of political legislation in curbing the mounting gas prices, viewed the proposed capping as the state’s responsibility.
“We as the state legislators do not have a lot of control over speculation and the supply and demand of gas,” Kane said. “But one area in which we do have the ability to help people save money is the gross receipts tax. If we have the opportunity to save people money, this is what we should be doing.”
However, state Rep. Roland Lemar, Democrat of New Haven, said he was lukewarm on both proposed bills, explaining that the additional revenues from an uncapped gas tax could be directed toward improvements in state infrastructure. Weighing the options of reduced taxes and investment, Lemar argued that investment in public transportation such as the Metro-North Railroad or the New Haven city buses will create bigger, long-term aggregate benefits because citizens use these public transportation systems on a daily basis.
“I honestly am a little conflicted at this point,” Lemar said. “It is basically about whether it is smart to return a penny for every dollar now or smart to invest.”
The national average price of a gallon of gasoline stood at $3.88 Tuesday.