A continued gas tax holiday eyed in Connecticut; diesel tax increased

An extension of Connecticut’s gas tax holiday appears to be in the offering. But truckers shouldn’t get excited. Diesel taxes aren’t in the conversation.

Fresh off his re-election earlier this month, Gov. Ned Lamont announced that he is interested in continuing the state’s gas tax cut beyond Nov. 30.

Eight-month gas tax holiday

In March, the governor signed into law a bill to give motorists a three-month holiday from paying the state’s 25-cent excise tax on gas. The initial tax holiday was scheduled to run from April 1 through June 30 – the end of the fiscal year.

Shortly thereafter, a budget deal reached by state lawmakers and Lamont extended the tax break through the end of November.

Suspension of the gas tax costs the state an estimated $30 million each month.

The tax holiday does not affect the 41.1-cent excise tax on diesel.

Diesel tax up since July

While Connecticut motorists are getting a price break on gas expenses, the state’s diesel tax rate increased on July 1. The increase was attributed to wholesale fuel prices that more than doubled over the previous year. As a result, the then-40.1-cent excise rate increased by 9 cents to 49.2 cents per gallon.

Diesel in the state is taxed following an annual formula that includes a fixed base and an adjustment that accounts for the average wholesale diesel prices from the prior year.

Feasibility of extension

Lamont says inflation that is “slamming the middle class” warrants continued pursuit by the legislature to provide relief where possible.

Extending the gas tax holiday through the winter months is among the options being considered by the governor’s administration, Lamont said during a post-election media conference on the Capitol lawn.

The gas tax is among the topics expected to be considered during a special session of the legislature slated for later this month.

Lamont said his budget staff will review whether continued suspension of the gas tax would affect the state’s ability to repair roads and bridges.

The governor’s budget office reports that the state’s special transportation fund is on pace for a $150 million surplus, which could absorb the $30 million monthly cost for the tax holiday.

Statehouse support

Statehouse leaders have touted the success of the price break.

Leading Democrats have said since September that they are strongly considering an extension of the gas tax holiday.

Republican leaders have also called for an extension. Additionally, they want a repeal of a new highway mileage tax on truck drivers that is scheduled to take effect the first of the year.

Truck tax

In 2021, Lamont signed into law a bill to impose a highway user fee, or tax, on Class 8 through 13 trucks. The rule has a Jan. 1 effective date.

At that time, tax rates will increase incrementally for trucks starting at 26,000 pounds. Specifically, rates will range from 2.5 cents per mile for trucks with a gross weight of 26,000 pounds to 10 cents per mile for trucks weighing 80,000 pounds.

Trucks weighing more than 80,000 pounds are slated to pay 17.5 cents per mile.

Senate Republican leader Kevin Kelly of Stratford has said the truck tax is a bad look for the state.

“The very people we praised as frontline essential workers during the pandemic, who went above and beyond to transport necessities to us when we could not go very far ourselves, would be the target of this tax,” Kelly said at the time. “And the tax will be passed on to our families.”

The Owner-Operator Independent Drivers Association is opposed to the new tax. LL

More Land Line coverage of news from Connecticut is available.