Governor Malloy signed a bill today that caps the gross receipts tax on the wholesale price of gasoline. The law will give drivers a small break at the pump.
The legislation was unanimously approved last week by the General Assembly. The governor waited until today to sign the bill to give Connecticut businesses affected by the law time to adjust their computer systems.
The law caps the gross receipts tax at $3 per gallon wholesale. Currently the wholesale price is about $3.20 per gallon, which means a savings at the pump of a little over a penny.
"Well, it's a beginning. We need to fix this problem and obviously with our budget deficit issues we're going to have to do this in small increments and steps," said Michael Fox of the Gasoline and Automotive Service Dealers of America.
Fox says even with the cap, the gross receipts tax is way too high. "The original intent of the tax was to be a funding mechanism for the Connecticut underground tank cleanup fund," said Fox. "Now this tax generates a substantial amount of money. Last year it generated $344 million and only $250,000 was dedicated to the fund. The rest went into the general fund and disappears."
Fox is convinced the recent spike in gas prices is due largely to Wall Street speculators on the commodity futures market artificially forcing the price of gasoline higher. And while not everyone agrees that speculators are to blame, there are several bills pending in Congress that would curb oil speculation on the commodities markets.