The true cost of CA gas tax – the State’s numbers just don’t add up

Does the recently passed gas tax devoting $57 billion to our roads seem to good to be true? Well, that’s because it is.

While poring over a whole heck of a lot of information on SB we came across an article in the Los Angeles Times which notes that only $34 billion of the first $52 billion raised by the tax will go towards roads. Here’s some more on that:

“About $34 billion of the first $52 billion raised will go to repairing roads, bridges, highways and culverts, with most of the money split 50-50 between state and local projects.

An additional $7 billion over the first decade will go to mass transit projects. Other money will fund improvements to trade corridors, including the roads serving the ports of Los Angeles and Long Beach, and will go toward reducing congestion on the most clogged commuter routes.”

Gee, seems like all that money going to Southern California roads and to mass transit systems which those of us in the northern reaches of the state will almost certainly not benefit from is part of a common refrain – we’re getting gouged for taxes that don’t benefit us in the ways that we’re being sold on, and in many cases won’t benefit us at all.

Remember how a bunch of our local tax measures from the most recent election cycle promised to devote the money to a specific cause but actually contained provisions to funnel money towards other items? Our own local road tax, which included setting aside money for trails and hiring County employees, stands as a good example.Now it’s just happening at a state level.

On top of that, it looks like the actual costs of the gas tax have been misrepresented as well. Check this out (from this article):

“Specifically, the gas-tax hike which politicians tell us is 12 cents per gallon — which is bad enough — in actuality could be as high as 19 cents gallon. How is that possible?

The explanation is a bit complicated but important to understand. It involves a convoluted process known as the “gas tax swap” passed by the Legislature and implemented by the California Board of Equalization in 2010.

The gas tax swap eliminated the state sales tax on gasoline and replaced it with what was supposed to be a revenue-neutral per-gallon excise tax. This made it more legally defensible for the state to repay Proposition 1B transportation bond debt when California was in the midst of recession. The BOE was tasked with adjusting the numbers every year in a “backward looking” process so that California would collect no more revenue from the excise tax than it would have collected from the sales tax had it not been eliminated.

But here’s the kicker: The tax hike just jammed through the Legislature in less than one week by Senate Bill 1 contains a provision that, beginning in July of 2019, adjusts the base excise tax to what it was in July 2010 when the gas tax swap started. Currently, the excise tax on gas is 27.8 cents a gallon. But in July of 2010 it was 35.3 cents a gallon. So as it stands right now, that’s a seven cents per gallon increase, on top of the new 12 cents per gallon tax.

Magically, the 12-cent gas tax increase will likely be a 19-cent-per-gallon increase. And, of course, that entire 47 cents per gallon excise tax (35.3 + 12 cents) will be adjusted annually for inflation beginning Jan. 1, 2020 under SB1. If this seems complicated and hard to understand, keep in mind that the politicians like it that way.”

And a final trick from those intent on raising taxes further:

“Under the less costly scenario, cap and trade would raise gas prices by an estimated 15 cents per gallon in 2021, increasing to 24 cents per gallon in 2031. Under the more costly scenario, cap-and-trade would raise gas prices by an estimated 63 cents per gallon in 2021, increasing to 73 cents per gallon in 2031.

If one adds up all the hidden government costs, fees and taxes that California may soon impose on gasoline, drivers can expect to pay close to two dollars more than the national average.”

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