As Connecticut fuel suppliers and trucking companies braced this week for an adjustment of the state’s tax on diesel fuel scheduled to take effect next month, Republicans redoubled calls to avoid an increase they contend will exacerbate inflation.
The state adopted an annual adjustment of the tax on diesel fuel back in 2007. The change is determined by a formula based on the wholesale cost of diesel fuel. Currently, the tax sits at 40.1 cents per gallon and although the Revenue Services Department had yet to quantify the increase on Wednesday, it is expected to rise by nearly 10 cents per gallon on July 1.
Republican gubernatorial candidate Bob Stefanowski staged a press conference Wednesday at Meriden-based fuel supplier Tuxis Ohr to call for a handful of tax reduction policies including a suspension of the state’s diesel tax until the end of 2022.
Lawmakers suspended the state’s 25 cent-per-gallon excise tax on gasoline through a bipartisan bill in April. As part of the state budget, Democrats extended that holiday until December. They declined, however, to include the tax on diesel fuel. Stefanowski said the relief did not go far enough.
“It’s fine but we should not be taking a victory lap. Nobody inside that building right now,” Stefanowski said, motioning to the fuel supplier’s office, “is taking a victory lap because at over $6 for diesel prices, the governor cut [gas prices] by a quarter.”
At an unrelated event later in the day, Lamont told reporters that if he had an opportunity to pass more tax cuts, he would prioritize additional reductions to property taxes over reducing the tax on diesel.
“You know the diesel tax, let’s say half that is paid for by out-of-state tractor trailer trucks, many of which don’t stop in the state they just keep rumbling through,” Lamont said. “I like to do tax cuts that really focus on middle class folks here in our state.”
At the Stefanowski event, Katie Childs, vice president of Tuxis Ohr, said she sold 14 million gallons of diesel to customers in Connecticut. She argued the increase in the cost of diesel as well as next year’s implementation of a new highway mileage tax on large trucks would contribute to the rising costs of consumer goods.
“We’ve already done whatever we can to absorb the inflationary expenses so all of these new taxes that are coming in are going to go 100% being passed on [to consumers],” Childs said. “The people who are buying our diesel fuel are experiencing the same costs no matter what they deliver.”
State law requires the Revenue Services Department to announce the new rate by June 15. A spokesperson for the agency did not return a call for comment on Tuesday or Wednesday.
However, Rep. Sean Scanlon, a Guilford Democrat who co-chairs the legislature’s tax-writing committee, said Wednesday he expected the increase to be around 9 cents per gallon. Scanlon said legislative Democrats were discussing how to further alleviate pain at the pump but had no immediate plans to suspend the diesel tax before July.
“These decisions can not be made in a vacuum. We have to look strategically at what’s possible and what the impact of doing something is long term,” Scanlon said. “We’ve finally got the [Special Transportation Fund] to solvency and a good place. If we’re going to use part of that to deal with this, it should be something we think long and hard about.”
During a separate press conference Tuesday, legislative Republicans proposed another series of tax cuts including expanding the ongoing gas tax holiday to diesel fuel. At that event, Joe Sculley, president of the Motor Transport Association of Connecticut, argued that increasing the cost of diesel would increase the cost of all goods transported by truckers.
“Their customers are grocery stores and gas stations and clothing stores so your food is going to cost more, your gas is going to cost more and your clothing is going to cost more,” Sculley said.
Scanlon said he had trouble buying the argument that Connecticut’s policies could have a significant impact on inflation that is being felt around the nation.
“Listen, the entire country is going through this. These big companies are not going to make their costs cheaper here in Connecticut simply because we do something when no other state does,” Scanlon said. “This is a national problem but if we can give Connecticut drivers a break as we have done on the gas tax side, I think it will help. We just have to determine whether that’s responsible or possible.”
Asked Wednesday whether it was fair to blame Lamont for inflation that has also impacted countries in Europe, Stefanowski said Lamont’s policies had not helped things here.
“You talk to a mom or dad in Connecticut, they don’t really care whether it’s Governor Lamont or President Biden’s fault. Governor Lamont runs this state,” Stefanowski said. “He’s in charge of the economics of this state and he’s got to be held accountable.”
Lamont argued that Connecticut residents were about to receive some tax relief due to the recently adopted state budget.
“I think right now you’re going to have a significant tax cut dropping into people’s pockets over the next two to three months,” Lamont said. “I think it’s going to represent $1,000 to most folks and that will make a real difference now, not at the end of the year.”