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Michelle Steel

BOE Votes to Cut Gas Excise Tax By 10 Percent

This morning, the Board of Equalization voted in favor of a staff proposal to cut the excise tax on gas by ten percent. Because of our action, Californians will pay 3.5 cents less in excise taxes on each gallon of gas they buy starting July 1.

Our vote will lead to a much-needed tax cut for all Californians who are suffering under some of the highest taxes in the nation. But, unfortunately, California’s gas tax will continue to be a complicated mess unless the Legislature and the Governor act.

In 2010 and again in 2011, the Legislature passed laws that created what is called the “Fuel Tax Swap.” The swap was a scheme intended to take money that was earmarked for transportation projects and use it to pad the state’s General Fund.

That scheme requires the Board of Equalization to follow a complicated formula to estimate future tax revenue that theoretically keeps gas tax revenue the same as it would have been if the Fuel Tax Swap had never passed. Really it creates a potential roller coaster for gas excise tax rates.

As I wrote in the Orange County Register last year, “The calculations used to estimate future tax revenue are a guessing game based on numbers that change all the time. Gas prices rise and fall at different times throughout the year and are notoriously difficult to predict.” It’s wrong for the Legislature to require BOE to set rates based on this guessing game.

I was happy to support the proposed ten percent tax cut. I would be happier still if the Legislature and Governor would end this complicated mess and bring more simplicity and transparency to our tax system.