Here’s your (small) savings on the CT gasoline tax break
Lawmakers are set to pass measure to suspend fuel levy on Wednesday
With gasoline prices declining slightly but still near record highs, the state House and Senate are preparing to vote Wednesday on a three-month suspension of the state’s 25-cent per gallon excise tax, a move that would save the typical household about $50.
Both chambers of the General Assembly are poised to include a month of free bus rides and an extra tax-free week this spring on clothing and shoes that cost between $50 and $100, in addition to the traditional tax-free week in August.
Just about everyone in both political parties agrees on those three measures, and the votes are in place to pass them using a fast-track bill certification that skips committee hearings — in time to lift the gasoline tax on April 1. That was the plan worked out earlier this month by legislative leaders and Gov. Ned Lamont.
At issue late Monday was whether the emergency bill would also include added incentives for electric vehicles, and possibly a higher earned-income tax credit for working poor families. Some Democrats wanted to include one or both of those ideas.
The gasoline tax holiday carries a high profile because people see pump prices multiple times a day if they’re out and around. And it would happen fast. But compared with the property tax relief that’s also up for a vote in the General Assembly, the threemonth gas tax break is small.
If you drive 12,000 miles a year in a vehicle that drinks up a gallon for every 28 miles, you’re using 428 gallons a gasoline a year. That means you’re paying $107 a year for the excise tax at 25 cents a gallon — the rate in place
since the summer of 2000.
A three-month break in April through June, coming not during the heavy summertime driving season, would save a typical household with two cars a total of about $50. It would cost the state about $90 million, which would have to be made up elsewhere, as the gasoline tax is dedicated to road maintenance, debt from bridge and highway projects and other transportation uses.
Clearly, you would save a lot more from the temporary 25-cent-a-gallon reprieve if you drove, say, a Ford F250 Super Duty pickup truck at 15 miles a gallon and you trek all over the state for work.
But any way you slice it, at $4.34, Monday’s average price for regular gasoline according to AAA, you’ll save 5.8 percent during the three months. As the price of gasoline drops, your 25-cents-a-gallon savings will remain unchanged through June, but you will save a higher percentage on gasoline.
The average national price Monday was 8.5 cents higher than the average in Connecticut, AAA reported.
Will the price fall back to normal levels? AAA reported Monday that the average price of regulargrade gasoline in Connecticut was down 12.8 cents a gallon over the last week, and 14.9 cents since the March 11 peak. So maybe we’re heading in the right
direction.
(While we’re at it, we can retire the word “unleaded,” as the United States started phasing out leaded gas in 1975 and the last country on Earth to use it, Algeria, went all unleaded last July.)
Back to your savings from the tax reprieve: On a 15-gallon fill-up, you’ll save $3.75, whether the fill-up costs $65 or $35.
That’s a decent cup of coffee but over three months, it’s not going to add up to anything close to the savings from the expanded property tax credit on the table now, for the
2022 tax year — $300 proposed by Lamont, $500 proposed by House Republicans. Lamont’s package also includes a cap on local car taxes that would save money for motorists in about two-thirds of Connecticut’s cities and towns.
Some Republicans, including Bob Stefanowski, the likely Republican nominee for governor this year and Sen. Kevin Kelly, RStratford, the Senate GOP leader, want to also see a suspension of the wholesale tax on motor fuel, known as the gross receipts tax. That levy adds a
charge to the wholesale price of gasoline for a maximum total of about 26 cents a gallon when the pump price hits around $4.
Suspending the wholesale tax, however, would blow a hole in the state transportation budget twice the size of the gap we’re going to see, and there’s no guarantee the petroleum distributors would pass it along to us at the pump. Taxpayers would need to subsidize motorists, which already happens in the state budget.
We would all like to see lower taxes permanently of
course, but we have yet to see a line-by-line plan for reducing spending from Stefanowski, Kelly or anyone else calling for lower taxes.
Rep. Vin Candelora, R-North Branford, said he’d like to see a cut or suspension of $25 million over three months in the state tax on diesel fuel, which is taxed differently than gasoline. “It certainly impacts our local commercial industries,” Candelora said Monday.
The temporary gas tax break “is one concrete step that’s part of a larger goal to provide instant and meaningful tax relief to residents,” Lamont spokesman Max Reiss said Monday.
As for the other one-time tax breaks, they’re tiny overall but could be meaningful to the people who use them. The free bus service would be for one month, probably April or May, and would reduce revenue to the state by about $2.7 million. The sales tax-free week for clothing up to $100 per item would mean about $3 million less in tax collections, a rounding error.
To make life fairer and easier, the General Assembly should, this Wednesday, enact only the immediate, temporary tax cuts. Throwing in a measure for increased subsidies for electric vehicles, for example, raises complex issues. “What we do this week shouldn’t just be about providing short-term relief but it should move us toward a world where we are less dependent on foreign oil,” Sen. Will Haskell, D-Westport, the leading proponent of that measure, said Monday.
Candelora’s point: Let’s keep the electric vehicles bill on the non-emergency track along with other policy changes.
Candelora wins that round although the electric vehicles bill has merit as long as the savings is targeted at the middle class, not Tesla buyers. Look for a $3.75-per-fill-up tax break starting a week from Friday.