A gas tax break would have been nice as Californians took to the streets the 4th of July weekend. Instead, they were hit with a tax hike.
We learned that from one-party rule and a liberal state government in Sacramento. There is simply no bipartisan give and take.
Had Republicans had any influence in the state Capitol, there likely would have been a negotiated tax treaty that reduced gas prices at the pump.
But the California GOP has become so weak that it is no longer invited to the negotiating table. With supermajority control, Democratic lawmakers can pass whatever they want without Republican votes.
The only major political negotiations in Sacramento are between Democrats – Liberal lawmakers and Liberal Gov. Gavin Newsom. And indeed, the result is almost always liberal.
The gas tax hike, which took place on Friday, was only about 3 cents a gallon – tiny compared to the nationwide average pump price of $6.25. But it went in the wrong direction.
The small levy represented an automatic annual increase that “indexes” the tax to inflation. The total excise tax per gallon went from about 51 cents to about 54 cents.
The Legislature and then-Gov. Jerry Brown started this in 2017 when they raised the tax significantly. Republicans tried to repeal it, but voters kept the tax, and with it the annual increase.
The legislator could have suspended the increase and thus the entire consumption tax. But the Liberal leadership of the Legislature balked.
To his credit, Newsom proposed suspending the tax hike for a year. But he relented in the negotiations.
Republicans, sensing a marketable campaign issue, have clamored for a “gas tax holiday,” arguing that the entire 54-cent tax should be suspended for up to a year.
Not just Republicans, but President Biden. He recently asked Congress to scrap the 18-cent-a-gallon gasoline tax for three months. And he urged states to suspend their own levies.
Of course, in this polarized era, Congressional Republicans were opposed to what a Democratic president wanted.
“This is an obviously partisan political stunt and a fundamentally bad idea,” said Rep. Tom Cole (R-Okla.).
But in Sacramento, Republicans have the opposite view — probably in large part because here it’s the Democrats who oppose the tax exemption.
“President Biden understands the value of the gas tax stay, but the Democrats of Sacramento and this governor are deaf to their party leader and our pain at the gas pump,” Republican Senate Chairman Scott Wilk of Saugus said in a statement on Tuesday Friday.
Sacramento Democrats claim the gas tax suspension is wrong for three reasons:
— The money is needed for road improvements and repairs. The tax brings in $7.7 billion annually.
— There is no guarantee that the tax cut will not only be collected by the oil companies and that the pump prices will never be reduced.
— Poor people who do not own a car would not benefit from it.
The first argument is wrong. Budget writers last week forecast a revenue surplus of nearly $100 billion. There are kegs of money to replenish the highway fund without charging gas taxes.
However, there is legitimate concern that oil companies would rip off the tax break. Merchants pay the tax and add the cost to the fees they charge gas stations for filling their underground tanks. The stations then add it to the pump price.
“The benefit from the tax cut could be siphoned off upstream before it reaches the consumer at the pump,” said HD Palmer, spokesman for the state Treasury Department.
OK, but New York and other states have suspended gas taxes and haven’t had a significant problem with rip-offs from oil companies. You would hope that California could be at the forefront of gas distribution and punish a greedy company that has been outsmarting motorists.
As for poor people who don’t own a car, well that means they won’t be hurt by high gas prices either.
Newsom originally proposed giving public transit companies $750 million so they could help poor people by offering free rides for three months.
He also proposed suspending sales tax on diesel fuel for a year – and secured this in the final agreement. That costs the state $439 million.
Why suspend VAT on diesel but not on gas? It’s part of a pro business package. The goal is to reduce fuel costs for truckers transporting products to stores. In theory, this will also lower the cost of consumer goods.
Newsom proposed sending each car owner $400 — a maximum of $800 for more than one vehicle — but lawmakers refrained from helping just motorists. They wanted to help inflationary price increases for all consumer goods like groceries, not just gasoline.
The governor and lawmakers agreed on a $9.5 billion benefit package they call a “tax refund.” Thanks to Newsom, around 95% of income taxpayers will benefit.
Individuals earning up to $250,000 and couples earning up to $500,000 will receive something. The legislature wanted to deny benefits to those earning half as much — nothing for claimants earning over $125,000 or $250,000.
Benefits range from as little as $200 for high-income individuals to $1,050 for couples with children earning less than $150,000.
But checks aren’t in the mail. The money won’t arrive until October, just before the politicians are running for re-election. Deliveries will not be completed until January.
In fact, I think most of the state’s welfare payments should have been spent on needed infrastructure: water supply, wildfire protection, homeless shelters.
However, a gas tax suspension would have been excellent PR for the Democrats and would have watered down a Republican campaign issue.
Imagine the goodwill generated by a dramatic 50 cents a gallon drop in pump prices over the holiday weekend – rather than a 3 cent rise.
https://www.latimes.com/california/story/2022-07-04/skelton-gas-tax-increase-newsom-california Skelton: Pausing gas tax would have been great for Democrats