— State gasoline taxes would drop by about a penny a gallon under a one-year cap on the gross receipts tax, as proposed Monday by Democratic legislative leaders.
The penny savings is at today's wholesale prices, and the savings could rise to 7.5 cents a gallon under the state's complicated gas taxes if the wholesale prices rise by a dollar a gallon.
The good news is that legislators are prepared to move quickly to give some relief from skyrocketing prices – even if they lack the power to slash prices for an important commodity whose price changes because of market fluctuations and Middle East turmoil.
The bad news is that the proposed Democratic tax cap at $3 a gallon would end on June 30, 2013. That date is important because current state law calls for the gross receipts tax to jump on the following day — July 1, 2013 — to 8.81 percent from the current 7.53 percent.
"It's actually a 15 percent increase'' in the tax, said Sen. Len Suzio, a Meriden Republican who has studied the issue. "We could see a double whammy — due to the cap expiring and the rate itself going up. Now, you're talking about a very big increase on July 1, 2013.''
Republicans have been calling for the cuts for years, and that call resumed recently as gasoline prices began skyrocketing.
But Democrats say they are taking the idea a step further. In addition to the cut in the gross receipts tax, Democrats are calling for a number of caveats to guard against price gouging.
"People are predicting the price of gasoline could go to $5 per gallon this summer,'' said Senate President Pro Tem Donald Williams, the highest-ranking senator.
After the Democrats finished their press conference outside the state Capitol on a warm day, House Republican leader Larry Cafero stepped to the microphone and said, "You have to admire a person who admits they're wrong and changes their mind.''
He added, "In fact, on eight occasions, we put forth this very proposal, and it has been turned down. Just a few days ago, it was said by members of the Democratic leadership that this was nothing more than politics, that it was political gamesmanship. But fortunately, I think they have realized that people out there are angry and frustrated and looking for government to do something. So it is a great day.''
No date has been set on when the legislature would vote, but Cafero said it should be scheduled as soon as possible. With support from the Senate president pro tem, the House speaker and both majority leaders in the Democratic-controlled legislature, the chances of action by the General Assembly this year are virtually guaranteed.
Cafero conceded that the timing is important because this year is an election year for all 151 House seats and all 36 Senate seats.
"When we proposed this earlier in the session, we were told no, it's not coming up, it's political gamesmanship,'' Cafero said. "Now, 37 days later, it's an idea that they want to embrace.''
The average price of regular unleaded gasoline in Connecticut breached $4 a gallon last week. On Monday, AAA put the average in Connecticut at $4.013
The Democratic plan calls for capping the 7.53 percent effective rate of the gross receipts tax until June 30, 2013, the end of the next fiscal year, at the wholesale price of $3 a gallon. On Monday, the wholesale price was $3.18 a gallon. As such, the savings at the current prices would be about one penny. But that savings would rise to 7.5 cents a gallon if the wholesale prices went to $4 a gallon.
Under the state's complicated, two-pronged tax system, the gross receipts tax is in addition to the flat, 25 cents-a-gallon tax on gasoline. Those taxes are in addition to the federal gasoline tax of 18.4 cents a gallon that has remained the same in recent years.
Senate Republican leader John McKinney of Fairfield said that the idea is not new. Various Republican amendments dating to 2006 called for capping the gross receipts tax.
In Massachusetts, the overall gasoline taxes are 23 cents a gallon, compared with about 50 cents a gallon in Connecticut, McKinney said. In Rhode Island, the overall gasoline taxes are 33 cents a gallon.
"Our tax is too high and unfair,'' McKinney said.
The savings could be more than $100 a year if a motorist drives about 13,000 miles annually, McKinney said.