Shoreline Leaders & Emergency Management Officials: Hurricane Season perfect time to get rid of Propane Tax Suspend the tax – Restore the exemption

David Daniels, Pres. Daniels Propane, Joe Sastre, Pres. Emergency Management Assoc. of CT, Rep. Devin Carney and Sen. Paul Formica at the microphone during a press conference in East Lyme announcing a plan to repeal the propane tax.

Niantic, CT – Senator Paul Formica (East Lyme), Representative Devin Carney (Old Saybrook) and Emergency Management Association President, Joe Sastre, joined by David and John Daniels of Daniels Oil announced today a joint effort to get rid of the state’s Propane Tax.

“It is unfair to the people who are trying to be pro-active. After the large storms we have experienced in recent years, many people bought generators in case of another catastrophic event. Now, they are finding out that they are getting taxed for thinking ahead,” said Senator Paul Formica.

The State of Connecticut assesses a tax on fuel delivered to a customer who uses a propane tank connected to a generator. This nearly 9% tax (gross receipts tax) put on the books in 1995 is assessed on the delivery ticket, even if the propane also supplies an exempt heating use (such as home, pool, hot water, cooking, etc.).

Connecticut law says that in order to be exempt from this tax, the propane “must be used exclusively for heating purposes”. Because the propane to a generator system produces electricity and not heat, this tax is assessed on deliveries to tanks which solely supply generators.

A customer who receives a 100 gallon propane delivery at a cost of $3.00 per gallon will pay $24.30 in taxes per delivery. If they didn’t have a generator and the propane was used for heating purposes through another system they would not pay the tax.

“It’s fair to say this tax could affect tens of tens of thousands of families who were acting responsibly,” added Sen. Formica. “$24 a month in taxes may not seem like a lot, but if you multiply that over the course of a contract which is several years it could be as much as $500.”

“This tax is unconscionable,” said Representative Devin Carney, who has heard from a number of constituents who use generators for security, insurance, and life sustaining reasons, due to an illness, or if there is a power outage. “Many shoreline residents have been proactive and purchased generators to protect them, their families, and their homes in case of another Irene or Sandy. Yet, the Connecticut government has turned around and decided to tax them for doing the right thing. The nickel and diming has to stop,” added Rep. Carney.

“Generators – used safely – allow folks to remain in their homes rather than in emergency shelters. Since 2010, there have been 5 disaster declarations. Citizens have taken steps to protect their families. The state should applaud that effort not punish it,” said Joe Sastre, President of the Connecticut Emergency Management Association of Connecticut.

After hearing from the Department of Revenue Services, Propane industry leaders recently sent out a letter to companies advising them the propane tax will now be collected. David Daniels of Daniels Propane subsequently warned his customers the tax was going to be on their bills.

“This puts an unfair and heavy tax burden on those families who rely on their generators only in times of absolute emergency for life’s basics, such as well water for drinking and other daily uses. The use of propane for electricity generation on these homes constitutes an incredibly small portion of their annual usage, but this new enforcement change makes their entire usage subject to the gross receipts tax,” said David Daniels.

The Finance Committee did not pass the exemption during the 2015 legislative session. Formica, Ranking Member of the General Assembly’s Energy and Technology Committee and Carney plan to propose their legislation again this year and are currently asking the Department of Revenue Services to suspend collecting the tax until the issue can be dealt with.
Both also took the opportunity to alert people to a first of its kind public hearing of the State Tax Panel to be held this week in Hartford.

PUBLIC HEARING DETAILS:
Wednesday, September 16
4:00 pm to 8:00 pm
Location: Room 2E of the Legislative Office Building anyone who cannot attend may submit testimony electronically to [email protected]

Link to press conference video can be found here: http://ctsenrepublic.wpengine.com/2015/09/senator-formica-rep-carney-discuss-proposed-reductions-to-propane-tax-video/