Based upon a staff recommendation, the California State Board of Equalization will consider adjusting the excise tax rate for gasoline downward by $0.035 during its scheduled February 25, 2014 meeting in Culver City.
Gasoline prices have declined and are projected to remain low during the next fiscal year. If adopted, between July 1, 2014 and June 30, 2015, the excise tax on gasoline will be $0.36. The current excise tax rate is $0.395.
Legislation known as the “fuel tax swap” was approved and signed into law in 2010. The law lowered the sales tax rate on gasoline by 5 percent, and increased the excise tax rate per gallon of gasoline to assure that consumers would pay no more or no less in state gasoline taxes that they would have paid before the swap. The Board of Equalization has no independent authority to raise or lower taxes. Instead, it must continue to assure this revenue neutrality by adjusting the excise tax rate annually.
The “fuel tax swap” mandates the BOE to set the excise tax rate for gasoline by March 1 of each year. The BOE sets the rate based on the projected price and number of gallons drivers will purchase in the upcoming fiscal year. The upcoming annual rate also accounts for the difference in the actual and estimated sales tax revenue in the prior fiscal year that would have been collected under the old tax structure. The sales tax on gasoline funds a variety of programs while the excise tax revenue is used for public roads and mass transit.
BOE forecasts are based on price and purchase projections from the Department of Finance and IHS Global Insight, an internationally recognized firm that provides comprehensive economic and financial data to nations and states.
Statement from Board Member George Runner:
George Runner today issued the following statement regarding a Board of Equalization staff proposal to reduce the gas tax by 3.5 cents per gallon for the 2014-15 fiscal year:
“This proposed gas tax cut will give Californians a much-deserved tax break and help lower travel costs this summer. It has my full support.
“Although I’m pleased the tax will go down this year, it’s unfortunate that California will continue to have one of the highest gas tax rates in the nation.
“California has a confusing and complicated gas tax scheme that was imposed by the Governor and Legislature in 2010 over my objections. The BOE did not create this tax scheme.
“Taxes are hard enough to accept, but when they can’t be simply explained, it erodes public confidence. This tax scheme is so complicated even expert tax professionals have a hard time understanding it.
“Taxpayers deserve a simple and straightforward tax system that they can easily understand and won’t take them by surprise. They have the right to know how much they’re paying and where those dollars are going.”
The Board of Equalization will consider and vote on the proposed tax rate change at its February 25, 2014 meeting in Culver City.
Elected in November 2010, George Runner represents more than nine million Californians, including the Santa Clarita Vallely, as a member of the State Board of Equalization. For more information, visit www.boe.ca.gov/Runner.