New Gas Tax? Here's Why You May Pay More At The Pump In CT

CONNECTICUT — Several northeastern states, including Connecticut, are mulling over a cap-and-trade plan that would see motorists paying more at the pump. The states would direct the revenues from the plan towards mass transit projects designed to reduce carbon emissions, which may include mass transit, electric-vehicle charging and other transportation infrastructure.

The plan calls for gasoline and diesel wholesalers to pay the states for emissions allowances. Critics fear the wholesalers will simply pass the new costs directly through to consumers, and are calling it nothing more than a gasoline tax, according to Politico.

The other states invested in the plan, called the "Transportation and Climate Initiative," (TCI) are Delaware, Maryland, Massachusetts, New Jersey, Pennsylvania, Rhode Island, Vermont, Virginia, New York, Maine and New Hampshire, along with the District of Columbia.

Under Connecticut’s current system, motorists pay a flat tax rate of 25 cents per gallon, but they also pay a tax at the pump that is based on the wholesale price of gasoline. When the new initiative raises the wholesale price of gasoline in the state, that jump will be reflected in the numbers on the signs above the pump.

Gasoline taxes have been a robust and reliable source of revenue for states, but the country's speedy shift into greener transportation is giving them pause. Many state legislatures are growing leery regarding the long-term viability of taxing fuel receipts as the electric car market continues to flex. In Connecticut, that distrust manifested as a push by Governor Ned Lamont for new tolls. "The gasoline tax simply does not provide the reliable revenue we need, period," Lamont wrote back in February, making the point in a widely distributed pro-toll manifesto.

The scribes drafting TCI prefer the term "allowances" rather than tax, saying their "cap-and-invest" program would work like this:

• Placing a "cap" on carbon pollution from burning fossil fuels in the transportation sector to reduce transportation emissions.
• Requiring large gasoline and diesel fuel suppliers to hold allowances for the pollution that results from the combustion of the fuels that they sell to consumers.
• Bringing in proceeds that can be used to fund programs such as increasing public transit.

David Blackmon, an independent energy analyst/consultant, criticized the plan in a Forbes column, calling it a "regional gas tax scheme."

"Everyone involved knows that those wholesalers will pass along those costs to consumers, but the vast majority of consumers will never understand why the cost of filling their cars suddenly went up," he wrote. "They'll just see a higher cost at the pump and – conveniently, for the governors involved – most will just blame it on that evil conspiracy by 'big oil' to make those 'windfall profits.' "

The states see it as nothing quite so sinister. The Connecticut Department of Energy and Environmental Protection called TCI "a policy that accelerates the transition to a low-carbon transportation future and delivers a better, cleaner, and more resilient transportation system." The health and environmental benefits of electric cars are not enjoyed in poorer communities where their ownership is cost prohibitive. DEEP views the initiative as benefiting "all our communities, particularly those underserved by current transportation options and disproportionately burdened by pollution, while making significant reductions in greenhouse gases and other harmful air pollution across the region."

If the states approve TCI, the 10-year program of reducing emissions would start in 2022 and continue through 2032.