What you need to know
- Back in 2017 the Governor of California, Jerry Brown, approved raising the state excise tax on fuel. The measure raised the state excise tax on gasoline by 12 cents and increased the excise tax on diesel fuel by 20 cents. The sales tax rate on diesel was boosted from 9% to 13%.
- The plan was to provide the state with $5.2 billion annually for road and bridge repairs and expanded mass transit in the state.
- A petition drive to repeal the hike is underway and backers are "on track" to get enough signatures.
- President Trump endorses a 25 cent-per-gallon increase in the federal tax to help pay for his $1.5 trillion infrastructure plan.
California’s fuel tax hike and vehicle fee increases are part of a transportation funding package to provide the state government with 52.4 billion over the next ten years to repair bridges, roads and improve public transportation. However, drivers in California already pay the highest average price for fuel in the US after Hawaii, and have the second highest tax-rate in the country after Pennsylvania when combining state, local and federal taxes, according to GasBuddy.
Also, beginning Jan. 1, the law created a new annual “transportation improvement fee” on vehicle registrations ranging from $25 for cars valued at under $5,000, to $175 for cars worth $60,000 or more. That fee brought in $59 million in early payments during the last two months of 2017; and, in lieu of gas taxes, electric car owners will pay a $100 annual fee starting in 2020.
In addition, president Trump is backing the proposal of an additional 25 cents per gallon federal tax to fund his $1.5 trillion infrastructure plan, which encourages local and state-led efforts for big projects such as new highways.
The effect of the 'tax hike'
A repeal attempt is being promoted by various groups, including the Howard Jarvis Taxpayers Association and a group led by ex-Councilman Carl Demaio. As of Monday April 30th, these groups have managed to collect 940,000 signatures in support to rescind the tax increase and get the proposition in the ballot for the Nov. 8th midterm elections.
"If there's a pending 25 cent additional tax on top of the tax we just paid, I think that would be a huge incentive for Californians to say, 'gee, we're being crushed here — we can't do anything about the federal tax but there's something we can certainly do about the state tax,'" said Jon Coupal, president of the Howard Jarvis Taxpayers Association. (Source CNBC)
On the flipside, citizens discontent has fast-tracked road repair projects. According to the Los Angeles Times, 26 large road and highway improvement projects are in the design and pre-construction stages in Los Angeles County, and preparing to break ground in the coming months — much earlier than they would have started without the gas tax increase, officials said.
To make sure the public sees progress being made, Caltrans has created a website that allows residents to follow the status of projects throughout the state.
Even though Californians are paying more taxes than almost the rest of the US, there are split feelings about rescinding the legislation. In a poll released on February 7th by the Public Policy Institute of California showed California voters are split on repealing the gas tax hike. When asked whether they favor the repeal, 47 percent favored it and 48 percent were opposed. It found strongest support for repeal among Republicans.
