The Gas Tax Cap

As gas prices rise along with the temperatures this summer, we are also witnessing overheated politicians feverishly peddling proposals to ease the pain at the pump before voters go to the polls in November. People are frustrated and unhappy, and elected officials are worried that voters will express that unhappiness in the voting booth. So now they are eager now to stake out positions as far away from the shaky epicenter of the status quo as possible. So it was that Governor M. Jodi Rell joined with GOP lawmakers last week to call for a special legislative session to enact a gas tax cap on wholesale gasoline prices.

Currently, Connecticut levies two taxes on gasoline: a 25-cent-per-gallon excise tax and a gross receipts tax that amounts to a seven percent surcharge on wholesale gas. The two taxes add more than 50 cents to the price of every gallon of gas sold in Connecticut, making our state California’s closest rival for having the most expensive gas in the nation.

The proposed gas tax cap favored by Republicans, which the governor first suggested as part of her “comprehensive energy blueprint” unveiled in 2006, would tax only the first $3.40 of the wholesale price of a gallon of gas. With wholesale gas now selling for about $3.55, the savings to consumers would be negligible; less than 20 cents on the typical fill-up for a typical sedan. But it would mean that consumers would stop paying weekly or even daily state tax increases every time the price of gas goes up.

The leadership of the Democratic majority in the Legislature, however, is dismissing the tax cap as an attempt by Republicans to gloss over the real problem: increased global demand for energy compounded by the failed national energy policy of the Bush administration. While they are correct in this assessment, the Democrats are less likely to mention what may be their prime motivation for derailing the gas tax cap: they do not want to give up the gas tax windfall that future price increases will bring to state coffers. This is especially true at a time when forecasts for growth of the state’s main source of revenue — the income tax — are softening significantly as job growth, investment income, and year-end bonuses face significant declines as the economy continues to cool.

While we will look to the top of the ticket for the real short- and long-term solutions to our energy woes this November, we will not absolve the state legislators running on the under ticket from their responsibilities to a frustrated and unhappy electorate. They may have no control over the oil supply or the nation’s energy policy, but they are directly responsible for state taxes.

These are tough times for budgets — public and personal — as everyone standing in shock at the gas pump knows. We do not think voters will be impressed in November by lawmakers who insist on squeezing every last tax dollar out of consumers while they apply a tax revenue windfall as a balm to their own painful budget problems. The rest of us are watching how we spend our money these days; the Legislature should do the same.