Lower gas prices create tax revenue problem

HARTFORD, Conn. (WTNH)– Lower gas prices are great news for drivers, but it’s very bad news for Governor Malloy and the state legislature. Taxes on gasoline are producing less and less revenue for the state at a time when everyone seems to agree that more money is needed to fix the state’s transportation system.

There are actually two taxes that everyone pays on gasoline, but one has gone way down. That’s why there is so much talk about bringing back the tolls. Here’s how the two gas taxes work:
Close to two billion gallons of gasoline and diesel fuel was sold in Connecticut last year. Every gallon of gas is subject to the 25 cent per gallon Gas Tax. There is also a second levy called the Gross Receipts Tax. It’s a percentage of the wholesale price of gas.

Not only are people using less and less gas every year, but because the wholesale price of gas has dropped like a rock, the Gross Receipts Tax is generating less and less to help pay for the state’s roads and bridges.

Last July, the wholesale price of regular gas in Connecticut was about $3 per gallon. At 8.1-percent you were paying about 24 cents per gallon at the pump for the Gross Receipts Tax.

Now, the wholesale price for regular gas is about a $1.40. That means the Gross Receipts Tax has gone down to about 11 cents per gallon.

Together the two taxes raised close to a $1 billion in revenue last year. Estimates on how much less they will generate now that the price of gas is so low won’t be released until later this week, but you don’t have to be a mathematical genius to see it’s going to be a lot less.

“So we have to think of another mechanism to fund these projects and one of them could be tolls,” said Rep. Tony Guerrera, D-Rocky Hill, the co-chairman of the legislature’s Transportation Committee.

Republicans rightly point out that when originally passed, the Gross Receipts Tax was supposed to be temporary and is another example of a broken promise.

“Many of us feel that, rightfully so, it should go away,” said Sen. Toni Boucher, R-Wilton, the ranking Republican on the Transportation Committee. “We shouldn’t have two taxes on gas in Connecticut.”

The Republicans say there is overwhelming public opposition to bringing back the tolls.

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