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Connecticut's diesel tax will increase by 9 cents per gallon on July 1 after a scheduled rate adjustment released Wednesday by the state's tax office.
The tax, which is currently 40.1 cents per gallon, will increase to 49.2 cents per gallon, according to a letter from Revenue Services Commissioner Mark Boughton to top Democrats and Republicans on the General Assembly’s tax-writing committee and to his budget director. State law requires that it be updated annually, based on a complex formula calculated by the Department of Revenue Services that takes into account daily fuel prices at two terminals over the prior 365 days.
"Better or probably for worse, there’s an annual taking a second look at the diesel tax, passed by the legislature many years ago," Democratic Gov. Ned Lamont said during an interview on WINY-radio in Putnam on Wednesday. "So on July 1st, it goes up nine cents. That’s bad. The only good news is we’re still very competitive, even less than Rhode Island, less than New York."
The state’s fixed price diesel tax was created more than a decade ago to provide predictability for businesses. But this year, it was u nclear what the new rate might be, considering the sharply rising prices. Some had predicted the new rate could increase by as much as 15 to 20 cents per gallon, including Democratic Gov. Ned Lamont's Republican challenger in the 2022 gubernatorial race, Bob Stefanowski.
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The rate will remain in effect until June 30, 2023.
Legislative Republicans recently called for a special legislative session to cut taxes beyond the roughly $500 million in revenue changes included in the newly adjusted state budget that was approved by mostly Democrats, including extending the 25-cent-per gallon gasoline tax holiday until Dec. 1. Both GOP lawmakers and Stefanowski have called for suspending the state's diesel tax, arguing it's increasing the price of goods of services at a time of high inflation.