Diesel dreariness
Connecticut tax commissioner details increase of 23% — 9 cents per gallon — on July 1
HARTFORD — At a time of skyrocketing fuel prices, Connecticut’s tax on diesel fuel will soon increase by 9 cents per gallon, representing a 23% hike that officials say will have a ripple effect on the economy.
The new rate was announced Wednesday morning by the state tax commissioner and will take effect with the start of the new fiscal year on July 1. Legislators, fuel dealers, and consumers have been closely watching for the expected increase, which is made on an annual basis and is usually met with little fanfare.
But the increase is important this year as it comes on top of the state’s already 40-cents-per-gallon diesel tax. Fuel prices have been breaking records recently, and diesel fuel is used widely by trucks and sport utility vehicles such as the Chevrolet Suburban. The average price of diesel in Connecticut is currently $6.17 per gallon, while unleaded gasoline is $4.98 per gallon compared to the national average of $5.01 per gallon.
Besides having an impact on the economy, fuel prices are a major political issue for the upcoming November elections for governor, U.S. Senator, and other races in Connecticut.
“This is yet another blow to affordability in Connecticut that will further raise inflation on goods, groceries, and services throughout our state,’’ state Senate Republican leader Kevin Kelly and House Republican leader Vincent Candelora said in a joint statement.
Despite ongoing pressure from Republicans for a special session to reduce taxes, Gov. Ned Lamont has repeatedly rejected the idea of cutting
the diesel tax. He dismissed a call by Republican gubernatorial candidate Bob Stefanowski to not only block the July 1 tax increase but also stop collecting the entire 40 cents per gallon diesel tax for the rest of the year. Despite ongoing pressure from Republicans for a special session to the diesel tax. He dismissed a call by Republican gubernatorial candidate Bob Stefanowski to not only block the July 1 tax increase but also stop collecting the entire 40 cents per gallon diesel tax for the rest of the year.
“The diesel tax — over half of that is paid by out-of-state tractor trailer trucks, many of which don’t stop in the state,’’ Lamont told two Capitol reporters recently in an interview in West Hartford. “Most of the diesel tax is paid for by big tractor trailers going through.’’
When making decisions about cutting taxes this year, Lamont said that he focused on taxes that are mainly paid by Connecticut consumers. But Republicans and Joe Sculley, executive director of the state truckers’ association, countered that consumers will pay more for their purchases because the increases will be passed along by the trucking companies.
Like officials in the fuel industry, Lamont said last week that he did not know much the diesel tax would increase on July 1. Regarding Stefanowski’s statement in Meriden last week that the tax could go up by 15 to 20 cents per gallon, Lamont said, “People are making up numbers out there.’’
Under law, state tax commissioner Mark Boughton notified legislators of the hike Wednesday.
“In accordance with this statutory obligation, I am hereby notifying you that, effective July 1, 2022, the tax rate on diesel fuel will be 49.2 cents per gallon,’’ Boughton wrote to Democrats and Republicans. “As you are aware, this rate will remain in effect until June 30, 2023.’’
The tax rate is calculated through a multistep formula that is based on the average wholesale price per gallon, which was $2.49 for diesel for the period between April 1, 2021 through March 31, 2022. The new rate is based on that timeframe, even though prices have increased since then.
The tax rate has fluctuated along with the prices. While the tax rate has been 40 cents per gallon for the past fiscal year, the rate was 44 cents per gallon previously.
Lamont said the Democratic-controlled legislature found the right combination of more than $600 million in tax relief and $3.58 billion in additional debt payments that were approved during the regular session that ended in early May. That total is in addition to $1.6 billion in pension payments last year.
Lamont points to the overall tax-cut package that includes cutting car taxes in about 75 of the state’s 169 cities and towns. Communities with a mill rate higher than 32.46 will benefit as of July 1, but there will be no relief for wealthy, low-tax-rate towns like Greenwich, New Canaan, Darien and Westport. Besides Hartford and East Hartford, communities that will receive assistance include West Hartford, Waterbury, Bridgeport, New Haven and others.
For towns with a mill rate of 50, for example, the rate for drivers would be reduced to 32.46, and the state has pledged to reimburse the towns to make up for the tax revenues that the towns will lose.
But Kelly and Candelora were not satisfied. “For Connecticut Democrats to say they’ve already done everything they can to offer relief is completely false,’’ the Republican leaders said. “People are suffering and raising taxes on the trucks that deliver our food and home heating oil, as well as our local landscapers, plumbers, and workers is only going to make inflation even worse and increase costs on everything from groceries to home repairs. It doesn’t matter if a truck comes from out of state. They are here in Connecticut to deliver goods that we rely upon. If their costs go up, so too does the cost of the goods they provide.’’
The two top Democrats in the legislature, House Speaker Matt Ritter of Hartford and Senate President Pro Tem Martin Looney of New Haven, said that Republicans had a chance to join in the tax cuts that were passed, but they did not.
Like other Republicans, Stefanowski has also called for suspending the gross receipts tax on gasoline, which is currently about 26 cents per gallon and is collected separately from an additional 25-cents-per-gallon excise tax that has been suspended until Dec. 1. As Republicans have done for months, Stefanowski also called for suspending the highway use tax on large trucks that is scheduled to begin on Jan. 1, 2023 and would raise about $90 million per year.
“Governor Lamont says he is a tax cutter. Really?’’ Stefanowski asked after Wednesday’s announcement. “Higher costs for goods means higher inflation, and an even more expensive state. I urge Governor Lamont to suspend all state taxes on gas and diesel to help residents get through the current crisis that he and President Biden have created.”
But Lamont has strongly backed the diesel tax and the highway use tax, saying the money is needed to fix roads and bridges that have been neglected in the past.
Despite requests from Republicans,