In an oil-producing, oil-refining, state like California, customers continue to get “gouged” by “Big Oil.” (Why do you suppose THAT is? Hint: “It’s the MONEY, stupid!” ) Now, California motorists will experience an increase in cost from our other “friends” (in GOVERNMENT) in the statewide excise tax on gasoline, which will rise by 3.5 cents, to 39.5 cents per gallon, starting July 1, 2013. The California Board of Equalization approved the increase by a 3-2 vote Thursday.
The legislation lowered the sales-tax rate on gasoline to 2.25 from 8.25 percent and raised the excise-tax rate to 35.3 cents from 18 cents per gallon starting July 1, 2010. It required the fuel-tax swap to be revenue neutral, meaning the tax revenue generated by the two taxes combined should not change as a result of the swap. The legislation required the board to adjust the excise tax by March 1 each year to achieve revenue neutrality, with the change taking effect July 1.
Because the sales-tax rate is a percentage, not a per-gallon amount like the excise tax, sales-tax revenue varies considerably based on gasoline prices and consumption.
Don’t you wish that the members of the California Legislature were smarter? I know that I do!
The annual adjustment is based on several factors including how much the sales tax actually generated over a two-year look-back period and how much it will probably generate in the future based on gasoline price and consumption projections.
Before this year, the excise-tax rate went up by only a fraction of a cent each year – from 35.3 cents in 2010 to 36 cents now.
Board of Equalization member George Runner says he voted against the 3.5-cent increase because it was too high. He said only about a penny of the increase was a “true-up based on last year’s projection not being as high as it should have been.” The other 2.5 cents was based on a forecast prepared by the Department of Finance.
“Obviously, it’s the wrong time to put additional taxes on Californians when they are already paying record (gas) prices,” he said. “I probably would have voted for it if it was just the catch-up, a penny a gallon.”
“In theory,” if the 3.5-cent increase turns out to be too high, it should result in an excise-tax reduction in two years.
But we don’t live “in theory…”
We live in California.
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