Photo via [Public Domain] Wikimedia Commons
Photo via [Public Domain] Wikimedia Commons
There’s some good news for distraught California drivers: The state may be about to cut your gas tax.

The state Board of Equalization will consider lowering the excise tax rate for gasoline by 2.2 cents per gallon when it meets Feb. 23 in Culver City.

If adopted, the excise tax rate on gas will be 27.8 cents per gallon from July 1 through June 30, 2017.

The current excise tax rate of 30 cents per gallon remains in effect until June 30.

According to the Automobile Club of Northern California, California gas prices have remained among the priciest in the nation, possible because of refinery problems in the state. Prices have started to come down a bit as oil prices have plummeted, but Californians still pay more than people across the nation. But at least state taxes on gasoline may be about to be reduced.

“Californians overpaid gas tax last year due to a bizarre and complex formula that most people don’t understand,” said BOE Vice Chair George Runner. “When prices fall we must lower the rate to ensure fairness. The cut will be a welcome and much-deserved tax break for Californians, who currently pay more taxes at the pump than drivers in other states.”

California drivers pay two types of state taxes on gas: sales tax, which is a percentage of the price, and a per-gallon excise tax.

Before the so-called “fuel tax swap” took effect in 2010, drivers paid the full sales tax rate — then 8.25 percent — and an excise tax rate of 18 cents per gallon.

The fuel tax swap lowered the sales tax rate on gasoline to 2.25 percent and requires the BOE to set a per-gallon excise tax rate annually before March 1.

This excise tax rate is calculated such that drivers still pay the same amount in overall taxes at the pump that they would have paid before the swap.

In the 2014-15 fiscal year, the BOE collected nearly $5.4 billion in excise tax for the state’s Motor Vehicle Fuel Account, which helps pay for highways, roads and other public transportation projects.

The sales tax on gasoline also helps fund a variety of state and local road programs.

“In addition to tax relief, Californians need a clear tax system that’s easy to understand,” Runner said. “The current gas tax formula is a convoluted scheme enacted by the governor and Legislature in 2010. “

“The lack of transparency continues to erode public confidence,” he said. “The public deserves to know how much tax is being collected and how it’s being spent.”

The excise tax rate takes into account a number of factors, including forecasted gas price, forecasted amount of gallons sold, sales tax revenue that would have been collected prior to the fuel tax swap, and tax revenue over- or under-collected in the prior fiscal year.

The rate ensures that over a three-year period, motorists do not pay more or less in overall gas taxes than they would have prior to the swap.

— City News Service

Leave a comment

Your email address will not be published. Required fields are marked *