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Gov. Dan Malloy signs gas tax cap bill into law

Wednesday, April 04, 2012
Latest on Gas and Fuel Costs

Latest on Gas and Fuel Costs

Gov. Dannel P. Malloy signed a bill Tuesday that caps Connecticut's tax on the wholesale price of gasoline, but motorists shouldn't expect to see lower prices at the pump any time soon.

"If any politician is giving them reason to think that's the case, they're sadly mistaken," said Eugene Guilford, president of the Independent Connecticut Petroleum Association.

He said the average, wholesale price of regular unleaded gasoline at the state's largest wholesale supply point, New Haven Harbor, jumped 6.6 cents per gallon from Monday to Tuesday, from $3.22 to 3.29. That erases the expected 1.7-cents-per-gallon benefit from capping the gross receipts tax when wholesale prices hit $3 a gallon.

Malloy agreed that motorists shouldn't get their hopes up. According to AAA's Daily Fuel Gauge Report, the average price for a gallon of regular unleaded in Connecticut was $4.09 a gallon on Tuesday, compared to $3.92 nationally.

"I mean the reality is we have lots of things that are impacting the cost of gasoline, not the least of which is the explosion of a number of cars in China and India and other developing lands," he said. "The legislature decided to act and give an amount of relief, so you could either look at it as very positive or you look at it in a cynical way, you get to decide."

Proponents of the bill have said the cap on the gross receipts tax will ultimately help consumers, creating a restraint on taxes. It is one of two state taxes on gasoline. The other is a flat, 25-cents-per-gallon tax. The new law also includes various provisions aimed at preventing price gouging.

One reason motorists likely won't notice the cap in the fluctuating wholesale tax is the fact that prices have been on the rise and there's volatility in the world market, said Steve Guveyan, the executive director of the Connecticut Petroleum Council.

"These rules have a tendency to go into effect when prices are normally zooming up," he said, referring to the new law. "Do it during a period when there's absolute calm in the market, you'll notice it immediately."

It's unclear when the cap will fully take effect.

Even though the legislation that Malloy signed takes effect immediately, Guveyan said, the wholesalers who bring gasoline to Connecticut have until April 15 to change their computer systems to comply with the new law, so long as they're showing a good faith effort. And he said it's unclear whether they'll all make the changes in time.

"It's even more challenging than we first thought," he said. "You can't change the software structure of an entire industry in two weeks, which is what we're being asked to do here."

Guilford estimated it will cost the 30 to 40 affected companies thousands of dollars to re-engineer the computers.

"It's not just because the legislature said cap the tax and the governor signs the law, it automatically happens with the snap of a computer," he said. "I think this was more about perception than reality. And it's going to cost us a lot of money to do it."

Guilford criticized lawmakers for rushing the bill through the House and Senate chambers last week as emergency legislation, without getting input from the wholesalers.

"This is what happens when you pass a piece of legislation without a hearing," he said.

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