Chapin Votes for Capping “Gross Receipts” Gasoline Tax; Supports Percentage Fix

March 28, 2012

HARTFORD — State Rep. Clark Chapin today voted for a permanent cap on the per-gallon wholesale price at which gasoline is taxed, and he supported the Republican attempt to give residents additional relief by locking the percentage rate. The unanimous, bipartisan approval Wednesday of a $3-per-gallon wholesale price cap marked a legislative victory for Republicans such as Chapin, who has advocated for such a move repeatedly over the last few years. Under pressure from residents, 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 Chapin, Democrats agreed upon the permanent cap called for by Republicans.

“Family budgets throughout this state face significant pressure from rising gas prices,” said Chapin, who represents New Milford “Today, we moved a step closer to providing a bit of relief should prices increase as anticipated, and we’ve ensured that the state won’t see a tremendous revenue windfall at the expense of residents.”

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.

Chapin and Republicans attempted to lock that percentage, scheduled to increase to 8.81 percent next summer. Majority lawmakers, however, shot down the proposal 94-53.

“There’s little doubt that today represents a positive step, but the so-called gross receipts tax has two parts and today we tackled only one of them,” Chapin said. “If the legislature doesn’t act to lock in the percentage, residents will see a substantial tax increase at a time when gas prices are typically at their highest.”

The percentage increase in 2013 would bring the state roughly $55 million in new tax revenue.

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

Enhanced government power to pursue price-gouging stations was also included in the bill.