Diesel fuel bill would help Connecticut and its businesses

(May 18, 2007) Thousands of Connecticut businesses rely on diesel fuel as a key component of their business operations. These include a variety of manufacturers, distributors and contractors. But few realize that such companies currently pay multiple taxes on their diesel-fueled operations and that these combined taxes make Connecticut one of the highest diesel-cost states in the country.

The current tax policy also puts Connecticut companies at a disadvantage relative to out-of-state businesses that use diesel to move product to or through our state. For example, a portion of the tax Connecticut companies pay at the pump is tied to the “Gross Earnings Tax” (GET) — a tax which varies directly with the wholesale cost of diesel fuel. Companies also pay a Diesel Fuel Tax (DFT) on the diesel fuel they consume while traveling in Connecticut.

Out-of-state companies that ship product to or through Connecticut have to pay the DFT for fuel consumed while moving through Connecticut, but can avoid paying the GET by choosing to fill-up before coming into Connecticut. Being a small state, this is common practice among interstate shippers.

The House is now considering a bill, already passed by the Senate (SB-1392), that would simplify the diesel fuel tax structure, remove the competitive disadvantage Connecticut companies are currently experiencing, and provide a fairer and more stable method for obtaining revenue from the use of diesel fuel. Specifically, the bill would eliminate the GET and make-up the difference by increasing the DFT. Under this bill, taxes associated with the use of diesel fuel by commercial vehicles in Connecticut would be the same for all users regardless of whether they purchase the fuel in or out of state.

CBIA supports SB-1392. For further information on the bill, please contact Eric Brown at 860-244-1926 or browne@cbia.com.

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