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California gas taxes: Higher than advertised

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FILL’ER UP: California claims its gas tax is .395 cents per gallon but the numbers suggest it can be as high as $1.13 per gallon, plus local sales taxes.

By Stephen Frank | Watchdog Arena

If you ask Gov. Jerry Brown how much the tax on gas is in California, he would quickly say $.42 cents a gallon.  If you ask the California State Board of Equalization (our taxing agency), they’ll tell you that “Effective July 1, 2013, the total state excise tax rate applicable to motor vehicle fuel is $0.395 per gallon.”

But that is not the full tax.

You also have to add sales tax to the price. In California, in addition to the state, sales tax is levied by the city or county and runs from 7.5 percent at the low end to 10 percent at the high end—the average is around 9 percent.  So on a $4.00 gallon of gas, add at least 30 cents, up to 42 cents, to the price (could this be where the governor gets his 42 cents?).

Earlier this week, Fox Business reported the average price of gasoline nationally was $2.68.  Then they reported the average cost of gasoline in California was $3.81.  How could the tax be 42 cents, yet the difference in the national price be $1.13?

Yet even within California, prices vary widely.

On July 18 I drove from Simi Valley, near Los Angeles, 225 miles to Fresno in the Central Valley.  In Simi that morning the cost of a gallon of gas was $4.19 a gallon.  Just outside of Fresno, the price was $3.15 a gallon, more than a dollar less.  Some of the friends I met in Fresno came to the meeting from the San Francisco Bay Area.  The cost of gas in their area was $4.89 a gallon.

Why the difference?

First, throughout California, oil companies need to pay a “cap and trade” fee to save the earth.  The first billion of this money goes to help finance the High Speed Rail, which is going to cost, when finished, $200 billion.  The fee on the oil companies is a sliding one—the lower the price of gas, the lower the fee—the lowest being ten cents.  But the higher the price of gas, the higher the fee.

The Daily Caller described it best earlier this year—a tax on a tax.

“They are not calling it a tax, and these guys (wholesalers) are adding it to the cost of the fuel, so you are paying a tax on a tax,” Max Castillo, who owns a convenience store and gas station, told the San Diego Union-Tribune. “California is the leader of the nation in paying taxes.”

The main reason the cost of gas in California is higher than the rest of the nation and varies between sections of the state is that it’s the only State in the nation that has “designer” gas.  The make up of our gas is used no where else in the nation.  Worse, it’s not even used in all parts of California.

Per KPCC, July 15, 2015, “California is considered a distinct market from the rest of the U.S. because of state requirements to produce a less-polluting blend of gas known as CAROB. The state’s supply has been further constricted this year because an Exxon Mobil refinery in Torrance, which normally supplies 15 to 20 percent of the region’s gas, has been partially shutdown since an explosion in February.

To recap:

  • 39 cents for excise tax
  • 30-42 cents for sales tax
  • 10 cents for cap and trade “fee”—tax on a tax
  • 18.4 cents federal excise tax

Total direct tax on a gallon of gas is just under $1.00  If the average cost of gas in California is $1.12 a gallon higher than the national average—and your taxes are about $1.00, then it’s reasonable to say the cost of the “designer” ingredients is about $.12 a gallon.

As a comparison, the oil and gas companies have a national average of 2.6 percent profit. At best on a $4.00 gallon of gas, the oil companies get $.25 and the government gets $1.00—four times the amount the companies taking the risk get.  So when you hear people demanding an investigation of the “outrageous” oil company profits, they should instead investigate government tax policy.

This is California, so it is going to get worse.  On June 15, Gov. Brown announced he would sign the 2015-16 state budget.  He said it was balanced and even had a surplus.  One day later he announced two special sessions of the legislature.  It seems he “forgot” to include money for free health care of 170,000 illegal aliens and money to fix our roads.  Currently, in special session, the Democrat controlled legislature is considering how to fill a $5.7 billion budget gap.

A friend of mine, Jim Lacy, wrote a book, “Taxifornia”.  Correctly stated, all you have to do is look at gas taxes and see how the state is deserving of the moniker.

This article was written by a contributor of Watchdog Arena, Franklin Center’s network of writers, bloggers, and citizen journalists.

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Stephen Frank is a long-time political activist in California. He is the publisher of California Political News and Views at capoliticalreview.com. Find him on Twitter: @capoliticalnews