Taxes that adversely affect generators of business activity tend to diminish economic growth, and need to be measured in terms of their impact on the state's long term economic outlook. A balanced state and local tax system is important in preventing excessive reliance on one or two taxes and in limiting the influence of taxes in economic decision-making by individuals and businesses. Efforts to improve Connecticut's tax system should focus on property taxes, which are higher than in most states and are a major obstacle to revitalizing our major cities. The state's gasoline tax is the highest in the nation. This is due to past decisions to increase capital investment in transportation projects and to limit the source of revenues for transportation purposes.
Most states have significant toll revenues and use other taxes to subsidize mass transit operations.
Connecticut removed all tolls during the last decade, and funds all bus and train operations from the gas tax and DMV fees. In attempting to lower the gasoline tax, the state should not jeopardize the long term solvency of the Transportation Fund or the ability of the state to make needed capital investments in the future. Much of the higher revenue may be cyclical in nature, and cannot be expected to continue indefinitely. It would be a mistake to commit these surplus funds to structural changes such as new or expanded programs, or tax cuts of indefinite duration. Once the cyclical forces driving up revenues stopped, the state budget would be plunged into a deficit.