The tax you pay on a gallon of gas will rise by 3.5 cents in California come July 1.
state Board of Equalization voted 3-2 on Thursday to increase the
excise tax about 10 percent, from 36 cents per gallon to 39.5 cents per
The increase is
partly due to a $157 million shortfall in gas-tax revenue in fiscal
2012, and also a projection of less consumption by California drivers.
The state legislature switched its gas taxation system in 2010
so it could re-appropriate some of the gas tax money from road
maintenance to other areas. It reduced the sales tax from 8.25 percent
to 2.25 percent, but roughly doubled the excise tax to 35.3 cents. The
excise tax has increased multiple times since, but previous hikes were
by fractions of cents.
excise tax is a tax on an individual product purchased, not based on the
price. The publicly elected Board of Equalization must set the rate
each year by March 1 so that the state generates the same amount of tax
revenue it would have had it remained under the previous sales-tax
system. Taxable sales of gasoline in California have fallen from 15.9
billion gallons in fiscal year 2006 to 14.6 billion gallons in fiscal
A January study
by the American Petroleum Institute listed California's gas taxes as
second highest in the nation behind New York. After the July 1 tax
increase, however, the 70.1 cents average tax per gallon will lead the
Prices for regular
gas in California are already among the highest in the nation. On
Wednesday, the average price for a regular gallon of gas was $4.238, up
from $3.69 a month ago. California's prices are second only to Hawaii,
the Auto Club reported.
person who drives 15,000 miles per year at 20 miles per gallon will pay
an extra $26.25 per year in gas taxes. That's on top of the $478 per
year in state, federal and sales taxes.
sales tax on a gallon of diesel will increase by 1.94 percentage
points, but the excise tax will stay at 10 cents per gallon.
Jerome Horton, Betty Yee, and John Chiang voted yes on the measure.
Republicans George Runner and Michelle Steele voted against raising the
excise tax. The publicly elected members can serve up to two four-year
Board member George
Runner, who voted no on the tax increase, said he took issue with a
lack of transparency on the tax increase, and he said the state should
not be in the business of predicting the volatile gas prices. He said
the catch-up from fiscal 2012 only represented 1 cent of the 3.5 cent
"This has nothing
to do with good tax policy," he said. "This had everything to do with
trying to solve a budget problem in 2010."
The U-T has requested comments from the three board members who voted to increase the tax rate.
Gin, an economist at the University of San Diego, said he didn't think
the price increase would affect demand for gasoline, but said it would
gradually hit consumer spending.
the price of a gallon of gas goes up normally the money goes to oil
companies," Gin said. "This time the state is taking it in terms of tax
revenue so they could take that money and help offset the state deficit
or could be spending it on programs."
board in a statement said the excise tax revenues fund highway and mass
transit projects, while the sales tax revenues go to local government