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Monday, June 4, 2018

California’s Gas Tax Problem Is Your Problem, Too

California isn't the only state that's been raising taxes on fuel, and it's unsustainable.

Gridlock on sun-scorched highways and blasting car air conditioners over Memorial Day weekend are bringing Californians more regularly to the pump, and they’re noticing high prices… and high taxes.

Do not be fooled, rising gas taxes are not just a problem in the Golden State. Gas taxes and the daily inconvenience that they bring to commutes and leisure travel are on the rise across the nation. 27 states have raised or restructured their gas taxes since 2013. California’s 73.13 cents per gallon weighted average tax (federal, state, and local tax) is only second to Pennsylvania’s 77.10 cents/gallon tax.

The Problem with California

During the summer months, California’s already sky-high gas prices rocket upward as gas companies switch to summer grade gasoline. Yes, that is a real thing. Gasoline prices have increased by 47 cents per gallon since the start of 2018.

The average California household spends over $1,000 per year on gas taxes alone.

Combined with rising gas prices, the 12 cents per gallon state tax in California is really starting to affect Californians, and they are not having it, so to speak.

According to a recent poll by the Los Angeles Times, 51 percent of voters want to repeal the gas tax, while only 38 percent want to keep it. Reform California, an advocacy group in the state, submitted nearly a million signatures in favor of repealing the tax increase at the end of last month.

The average American spends only around $1,400 on gas per year. The average California household spends over $1,000 per year on gas taxes alone. This has a major impact on the budgets of families that are impacted by high gas taxes.

Adding this burden to consumers makes it harder for the average American to get by, especially commuters. The average gas tank size for a compact car like a Ford Focus is 12.4 gallons with a 27 mpg consumption rate in a city. An increase of 12 cents per gallon adds $1.48 to each refuel.

It may not seem like a lot at first, but once you add in the rise in gas prices over the summer, you will see that driving 10 miles for your burger at In-N-Out just got a little pricier.

The Justification Is Flimsy at Best

In the initial institution of this tax, California Governor Jerry Brown advocated that it was to provide $5.2 billion annually for road and bridge repairs and expanded mass transit in the state. A sound goal in theory, but gas taxes are not the best way to fund road infrastructure.

Money from taxes that are initially put up as user fees—for example, transportation funds coming from a tax on gasoline—ultimately are not used for their designated purpose, and so do not remain true user fees.

California is just the canary in the coal mine, a first sign that voters have had enough of this damaging policy.

Gas taxes rely on a diminishing base. With gas mileage increasing, and more hybrids and electric cars rolling off the lot each year, the revenues from a tax structured this way are not reliable in the long-term.

The simple answer can be to take public transportation instead. Again, good in theory, not necessarily good in practice. One quick trip to the state will reveal that the state’s geography and city layouts do not lend themselves to ready travel by public transportation.

The California gas tax increase was poor policy from the beginning. Now, with growing support for repeal and rising prices, the gas tax is running on fumes. Without broad public support, this policy was stalling before it left the station.

California is just the canary in the coal mine, a first sign that voters have had enough of this damaging policy, and are finally willing to oppose those who put such ideas into place. It won’t be long until other states follow suit.

  • Paige Lambermont is a Policy Associate at the Institute for Energy Research. In her role, she writes about the impacts of government policy on energy markets. She has a bachelor’s degree in political science from American University, and is from Butler, Pennsylvania.