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News Mar 30, 2012 - 1:18 PM

Rep. Molgano votes in favor to cap gas tax

By State Representative Michael Molgano's office

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HARTFORD, CT - State Representative Michael Molgano voted Thursday for a permanent cap on Connecticut’s Gross Receipts Tax, a 7.53 percent tax rate on the wholesale price of gasoline. The cap, now marked at $3-per-gallon, will provide relief at the pump for consumers as the cost of gas rises.

Senate Bill 457, An Act Concerning A Cap On The Petroleum Products Gross Earnings Tax And Penalties For Abnormal Price Increases in Certain Petroleum Products, passed unanimously on Wednesday marking a victory for Republicans such as Molgano, who has advocated for this legislation for several years.

Democrats recently embraced the concept they once opposed and proposed just a year-long cap to the “gross receipts” tax. Days later, after pressure from lawmakers such as Molgano, Democrats agreed upon the permanent cap called for by Republicans.

“Since I took office in 2010, I have been told frequently by numerous leaders in the legislature that achieving a cap on the gross receipts tax is simply unreachable – and now here we are,” said Rep. Molgano, who serves on the Transportation Committee. “In my mind, and in the minds of my constituents in Stamford, placing a cap on the gross receipts tax is common sense. The people of Connecticut can no longer afford to throw their hard-earned money away at the pump. This legislation is long overdue.”

The per-gallon tax total paid at the pump represents three separate taxes. First, there’s the federal tax— 18.4 cents. Next, there’s a fixed 25-cent state tax. Then, there’s a state “gross receipts” tax levied as a percentage of the wholesale price. The rate is 7.53 percent, costing consumers roughly 25 cents per gallon—a figure that increases every time the price of gas rises, giving the state more and more revenue.

Molgano and Republicans attempted to lock that percentage, which is scheduled to increase to 8.1 percent next summer. Majority lawmakers, however, shot down the proposal 94-53.

The percentage increase in 2013 would bring the state roughly $55 million in new tax revenue.
While Molgano was pleased a bi-partisan agreement on the cap was reached, he stressed the importance of capping the percentage rate of the tax as well.

“The price of gas is only likely to rise in the future,” said Molgano. “Who knows how much the wholesale price of gasoline will be next year. The legislation passed today is a great start, but I’m worried it did not go far enough.”

In the past, the gross receipts tax was used to fund transportation-related projects and upgrades, but over the years the fund has been raided to support general government spending increases.

The bill also limits price gouging during “abnormal market disruptions” such as when stress to an energy resource from weather conditions, acts of nature, failure or shortage of an energy source, strike, civil disorder, war, national or local emergency, oil spill, or other extraordinary adverse circumstances occur, and changes current petroleum profiteering statute to allow investigations of price gouging if wholesale gas prices rise by 15 percent in any 90 day period.

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