As prices at the gas pump approach $4 per gallon, tax incentives promoting the use of alternate fuels face an uncertain future in Connecticut because there’s a strong possibility their renewal will be left off the agenda when the General Assembly meets in special session next month.
The tax breaks, which have been a mainstay in Connecticut since 1992, unanimously passed the Senate earlier this year. But the House did not get a chance to vote on them before the regular session ended, and they are set to expire July 1.
“The problem is we’re out of session, so we don’t know if the special session is going to have a narrow scope or a broad one,” said House Majority Leader Christopher G. Donovan.
Setting The Agenda
House leaders will meet this week to discuss the special session agenda, and many interests will compete for attention in a narrow time frame.
The conveyance tax on purchased properties, also set to expire under its current rate July 1, is likely to receive the most attention in the special session, Donovan said.
T. Michael Morrissey, chairman of the Connecticut Propane Coalition, said the alternative fuel incentives are especially important now as the record-setting oil prices continue to push fuel prices higher.
“They run a lot of trucks on natural gas out of Hartford,” said Morrissey, who estimated there is a “50-50 chance” the incentives will be taken up in June. “They’re going to get clobbered.”
Promoting Propane
Among the incentives are exemptions from the 6 percent state sales tax on any vehicle purchased to operate on propane fuel or any equipment to be used at a propane filling facility. Propane auto fuel is exempt from the state gross receipts tax, and propane is exempt from the state excise fuel tax.
A 10 percent corporate tax credit is allowed on the cost of purchasing a propane-powered vehicle, and a 50 percent corporate tax credit is allowed toward the purchase and installation of a propane storage and fuel delivery system.
Morrissey said not extending the tax incentives would undo relief given by the federal government, which in October 2006 allowed an alternative fuel tax credit worth 50 cents per gallon of propane purchased. If the incentives expire, “it’s one step forward and two steps backwards,” he said.
Broad Support
Rep. Richard Roy, the chairman of the Environment Committee and sponsor of the tax incentive legislation in the House, said he will appeal to House leadership next week to get his bill on the agenda in June.
“For environmental reasons, I think it’s a high priority,” said Roy, a Milford Democrat who said he has widespread support among his colleagues for renewing the incentives.
Should the tax incentives expire without debate next month, Donovan said he foresees the House taking action during the next regular legislative session to reinstall them in some form.
“It’s something everyone agrees with, especially if you look at the price of fuels now,” Donovan said. “We know how important alternative fuels are, and we should foster them.”
