Connecticut House Cuts Gas Tax, Offers Other Relief
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With the state budget surplus hitting record-breaking levels, Connecticut legislators voted unanimously March 23 to cut gasoline taxes — and talked about reducing more taxes in the future.
The immediate plan calls for temporarily suspending the gasoline excise tax of 25 cents per gallon as of April 1 as already rising prices have skyrocketed even further after Russia invaded Ukraine.
After a one-hour debate, the state House of Representatives voted 143-0 with 8 members absent. The Senate also voted unanimously in favor, 33-0, later that night. The tax cut does not apply to diesel fuel, propane or home heating oil.
The bipartisan package also includes installing a one-week sales tax holiday on clothing and footwear items under $100 that starts on April 10, which is a vacation week for many public schools around the state. The same holiday will be held again in August for popular back-to-school sales.
Cutting the gas tax isn't the only way I'm working to make Connecticut more affordable. I've also proposed:
$336M in tax relief for working folks and retirees
Capping the cost of prescription drugs
3 months of free bus service
A one-week clothing sales tax holiday pic.twitter.com/25ZBe1jKmS — Governor Ned Lamont (@GovNedLamont) March 23, 2022
Lawmakers also will provide free bus service for the mostly lower-income riders on public buses, starting within the next week and lasting until the fiscal year ends June 30. The bus rides cost about $1 to $2 each, depending where the rider is going, and the overall reduction of $8.1 million will be paid with federal stimulus funds. Last month, 2.1 million rides were taken across the state.
The package, proposed by Gov. Ned Lamont at a time when gasoline prices have been rising in an election year, generated support from both Republicans and Democrats.
State Rep. Sean Scanlon, a Guilford Democrat who co-chairs the tax-writing committee, said many constituents have been hurting from the rising prices at the pump, which was an average of $4.32 per gallon March 23.
“Our constituents did not start a war in Ukraine,’’ Scanlon told his colleagues on the House floor. “Our constituents did not contribute to the global supply chain. ... This is a great first step that we can make to give them some affordability, some relief. ... At least we’re doing something.’’
Regarding future gasoline prices and global events, Scanlon said, “None of us know what is going to happen in the coming weeks and months.’’
While some lawmakers were concerned that the tax cut might not be passed along to drivers at the pump, Scanlon said that certain lines in the eight-page bill mandate that “every retailer must adhere to this and pass along the tax.’’
Connecticut House passes vote on 25-cent gas tax holiday - The house voted with no opposition, and the act is now on its way to the Senate. https://t.co/VJlGzhgl1O via @FOX61News — Richard Washington III (@RW3TV) March 23, 2022
Since the cut is temporary, some lawmakers were concerned that the tax could go back up again by 25 cents per gallon on July 1, shortly before the July 4 holiday that is known for heavy driving to beaches and vacation spots.
State Rep. Holly Cheeseman of East Lyme, the ranking House Republican on the tax-writing committee, said she wished that the tax cuts could go deeper.
“We already provide huge subsidies for buses, but if people need to get around, they need to get around,’’ Cheeseman said. “I’m frustrated that we haven’t included diesel.’’
The tax cuts are possible partly because the state has large budget surpluses in two separate funds due to increased federal stimulus money and capital gains taxes from Wall Street increases, paid largely by millionaires and billionaires in Fairfield County.
The gasoline tax cut of $90 million will come from the once-troubled Special Transportation Fund, which now has a projected operating surplus of $381 million in the current fiscal year and a projected fund balance of more than $600 million by the end of the fiscal year. The fund has been growing because it includes money from the second part of the state’s two-pronged gasoline tax, known as the gross receipts tax. That tax increases as the wholesale price increases, and the tax is currently at the state-capped maximum of 26.4 cents per gallon, which has added more than $100 million to the fund.
House majority leader Jason Rojas of East Hartford said the global events are “largely beyond our control, but we are not completely powerless to act.’’
Sculley
While March 23 focused on the gasoline tax, some lawmakers were also pushing to cut the highway usage tax on trucks that is scheduled to start on Jan. 1, 2023. State Sen. Cathy Osten of Sprague, an influential legislator as co-chairwoman of the budget-writing committee, wants to eliminate the truck tax for those transporting agricultural commodities. Lawmakers already provided an exemption last year for trucks carrying milk because they were concerned about helping the state’s dairy farmers.
Republicans countered that it was ironic that House Democrats had voted strongly against two Republican amendments on June 8, 2021, that would have exempted trucks carrying agricultural commodities, supplies, livestock and machinery. Those amendments failed on party-line votes on the day that the General Assembly approved the highway use tax, which is expected to generate $90 million per year.
Joseph Sculley, executive director of the Motor Transport Association of Connecticut, predicted that some out-of-state trucks would dodge the tax by simply driving straight through Connecticut, leaving local drivers to pick up the tab.
“We don’t need a partial repeal,’’ Sculley told reporters. “We think it should apply to nobody. We’re not going to get $90 million a year.’’
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