OLR Bill Analysis
AN ACT CONCERNING ADJUSTMENTS TO CERTAIN PETROLEUM PRODUCTS TAXES, PETROLEUM FRANCHISE AGREEMENTS, GASOLINE DISCOUNTS FOR CONSUMERS, HOME HEATING OIL AND PROPANE GAS CONTRACT DEPOSITS AND THE FUEL OIL CONSERVATION ACCOUNT.
This bill eliminates a scheduled July 1, 2008 increase in the petroleum products gross earning tax rate from 7% to 7. 5%, thus maintaining the 7% rate until the next scheduled increase to 8. 1% on July 1, 2013.
The bill declares that competitive pricing is essential to the functioning of a fair and efficient free market economy in the petroleum industry and bans gasoline franchise contracts from prohibiting gasoline dealers and distributors from offering discounts for using any method of payment.
The bill modifies (1) the receivership and post-judgment remedy laws by increasing the amount that a receiver may pay for certain consumer deposits and (2) the receivership laws by increasing the amount that a court may pay for wages owed. It specifies that “consumer deposits” include deposits made to a home heating oil or propane gas dealer under a prepaid or capped price per gallon contract.
By law, part of the growth in revenues from the petroleum products gross receipts tax above 2006 levels goes into a special account which will be used to fund fuel oil conservation programs. The bill modifies when funds are transferred into this account and makes minor changes to the board that administers the account.
EFFECTIVE DATE: Upon passage
§§ 1 & 2 – PETROLEUM PRODUCTS GROSS EARNINGS TAX
The bill eliminates an increase in the petroleum products gross earnings tax rate from 7% to 7. 5% currently scheduled to take effect on July 1, 2008. It freezes the tax at 7% until July 1, 2013, when under both current law and this bill, the rate is scheduled to increase to 8. 1%.
The petroleum products gross earnings tax applies to the gross earnings from the first sale of petroleum products in Connecticut by petroleum products distributors. Taxed products include gasoline, aviation fuel, kerosene, benzol, distillate fuels, residual fuels, and crude oil. The tax also applies to products made from petroleum or petroleum derivatives, such as paint, detergents, antiseptics, fertilizers, nylon, asphalt, and plastics. Many petroleum products and uses are exempt, including most diesel fuel, home heating oil, and propane gas used for heating.
§§ 3 & 4—CASH DISCOUNTS
The bill declares that competitive pricing is essential to the functioning of a fair and efficient free market economy in the petroleum industry. It finds and declares that (1) certain petroleum product franchise agreements prohibit gasoline retailers and distributors from offering discounts based on a buyer's payment method and (2) these provisions constitute unreasonable restraints on competitive pricing and inhibit the fair and efficient functioning of a free market economy within the petroleum industry. The bill declares that such provisions in franchise agreements are void and without effect because they are contrary to public policy. Further, it specifically prohibits existing and future contracts from including such provisions and voids them.
The law states that it does not prohibit sellers of anything, not just gasoline, from offering a discount to induce a buyer to pay by cash, check, or similar means. The bill specifies this also includes debit cards. The law also prohibits sellers from imposing a surcharge on a buyer who chooses to use any payment method, including cash, check, credit card, or electronic means.
§§ 5 & 6—RECEIVERSHIP PROCEEDINGS AND POST-JUDGMENT REMEDIES
The law authorizes a court to appoint a receiver, after notice, and make other orders “as the exigencies of the case may require” (CGS § 52-504). It currently requires that any debt due an individual for a deposit made in connection with the purchase, lease, or rental of goods purchased for personal, family, or household purposes that were not received before an application was made to appoint a receiver to be paid in full up to $ 900. The law sets the same requirement and cap in court proceedings involving (1) the termination of an entity, (2) the insolvency of a person or entity, or (3) the inability of a person or entity to pay all creditors in full. The bill raises both caps to the amount that federal bankruptcy law sets for paying the unsecured claims of individuals arising from deposits made for the same reasons, currently $ 2,425. The bill specifies that the covered deposits include payments made by a consumer to a home heating oil or propane gas dealer under a prepaid or capped price per gallon contract.
The law currently caps at $ 600 payments made by a receiver for debts due for wages for work performed within the three months before an application was made to appoint a receiver. The bill raises this cap to the cap in federal bankruptcy law, which is currently $ 10,950 for such debts due for wages. The law requires wages to be paid in full in court proceedings involving (1) the termination of an entity, (2) the insolvency of a person or entity, or (3) the inability of a person or entity to pay all creditors in full.
Federal law requires the caps in bankruptcy law to be adjusted every three years in accordance with changes in the Consumer Price Index for All Urban Consumers; they were last adjusted in 2007.
§ 7—FUEL OIL CONSERVATION BOARD AND PROGRAMS
The law establishes a 13-member board to administer fuel oil conservation programs, which are funded from growth in revenue from the petroleum products gross receipts tax above the revenue generated in 2006 which goes into a special account. The bill requires that one of the governor's appointees to the board be a representative of an in-state biodiesel distributor rather than in-state generators. It places the board with the office of the state comptroller for administrative purposes only. It requires that the fuel oil conservation account be within the Restricted Grant Fund rather than the General Fund.
By law, the amount of money in the account is capped at $ 10 million in FY 08 and $ 5 million thereafter. The bill eliminates a provision that requires the comptroller to deposit the money in the account before the accounts for the General Fund are closed each fiscal year. Instead, it allows the comptroller to deposit up to $ 2. 5 million into the fuel oil conservation account upon the bill's passage. It requires that any remaining amount due the account for FY 08 be deposited as determined by the comptroller at the close of the fiscal year, but not later than October 1, 2008.