Heavy truck tax could add $500 to yearly grocery bills

Article as it appeared in the Waterbury Republican American

State lawmakers were told Wednesday that a proposed heavy truck tax is going to add almost $500 to the annual grocery bills for many Connecticut families.

Gov. Ned Lamont is anticipating raising $90 million annually from taxing trucks weighing more than 26,000 pounds for the number of miles driven in the state once the proposed tax fully takes effect.

The proposed highway user tax was a focus of a legislative hearing Wednesday on the nearly $3.4 billion revenue package supporting the two-year, $46 billion budget plan that Lamont presented to the legislature in February.

The Lamont administration is estimating the truck tax will allow for capital investments of $1 billion over the next five years for funding needed safety, traffic congestion and modernization projects.

“Large and heavy vehicles, as we know, do the most damage to our roads,” said Melissa McCaw, the state budget director.

A trade association representing the state’s traditional grocery stores provided an estimate on the potential cost of the new truck tax to the Finance, Revenue and Bonding Committee.

“We estimate that the truck tax will cost an average Connecticut family of four almost $500 more annually for food,” said Wayne Pesce, president of the Connecticut Food Association.

He testified that estimate also reflects the costs of what Lamont has called a small carbon tax targeting large gasoline and diesel suppliers that the governor’s office estimates will add 5 cents to the cost of a gallon of fuel to start in mid-2023.

Bozzutos Inc. is a leading wholesale distributor of food and household products to retailers in New England, New York, New Jersey and Pennsylvania.

The Motor Transport Association Association of Connecticut submitted an estimate Wednesday from Bozzutos that the proposed tax will cost the Cheshire-based company $1.3 million annually.

MTAC President Joseph Sculley also disputed the administration estimate that the highway user tax will generate $90 million annually because compliance is voluntary.

Rep. Gale L. Mastrofrancesco, R-Wolcott, was skeptical, too, after she pressed McCaw on collection rate assumptions for the proposed self-reporting tax.

“Collections is going to be in terms of this honor-based concept and the extent to which there is going to be compliance, you know, I’ll be very honest with you, that is an open item,” McCaw said.

Mastrofrancesco said this big unknown calls into question the accuracy of the $90 million estimate for her.

“So, we don’t really know if that number is accurate because we’re basing that number on an honor system,” she said.

McCaw said the revenue estimate is based on collections in Oregon and New York state, analyses of state tracking data on the weight ranges of trucks traveling through the state and the miles driven, and the assumed Connecticut rates.

“We know that trucks drive over a billion miles in a given year throughout our state,” she said.

McCaw said records of state weighing stations were used to determine the percentage of trucks in various weigh ranges that drive through Connecticut.

The proposed highway user tax targets tractor-trailers weighing more than 26,000 pounds to spare lighter commercial vehicles such as box trucks that many small businesses use, she said.

The envisioned rates range from 2.5 cents per mile to 10 cents for trucks weighing 80,000 pounds, and trucks weighing more 80,000 pounds will pay an additional 7.5 cents per mile.

The governor’s office estimated it would cost a truck $20 to traverse Connecticut, with most paying between $2.50 and $11.50.

Sculley, the president of the state trucking association, predicted many out-of-state companies are not going to pay the voluntary tax, either through deliberate evasion or ignorance of the self-reporting requirement. He said in-state businesses will pay the brunt of what gets collected.

The president of the Connecticut Lumber Dealers Association said 10 of his Farmington lumber company’s 20 trucks weigh more than 26,000 pounds.

The proposed highway user tax will add to the already high costs of fuel and other taxes, vehicle charges and registration fees, and insurance for the family-owned company, said Robert Sanford, president of Sanford and Hawley Inc.

“The Special Transportation Fund should not be funded the backs of small businesses.,” he said. “Our members cannot absorb these added cost, especially as we continue to work through the hardships created by COVID.”

Unlike other businesses, the Connecticut Farm Bureau Association warned that dairy farmers are going to be unable to pass on the cost of the proposed highway user tax.

“This tax will come directly out of the pockets of Connecticut dairy farmers at a time when this industry is struggling to survive,” said Jane Nichols, the association’s executive director.