California gas tax drops but pump price may not
CULVER CITY, Calif. — The state Board of Equalization voted Tuesday to reduce a gasoline tax by 3.5 cents per gallon — but that doesn’t mean consumers will see a dip at the pump.
The board approved lowering the excise tax rate on non-diesel fuel from 39.5 cents to 36 cents for the fiscal year that begins on July 1, just as the summer driving season kicks in.
Gasoline suppliers pay the tax and aren’t required to pass on the reduction to consumers.
“Historical data indicates that this legislation requiring the adjustment does not have an impact on overall gas prices,” board Chairman Jerome E. Horton said in a statement. “However, it would be nice if this decrease in excise tax would result in a corresponding decrease in gas prices.”
Even with the reduction, Californians will be paying the second-highest gas tax rate in the nation — more than 67 cents per gallon — after New York, according to petroleum industry figures.
The excise tax funds highway and mass transit projects. The board adjusts it annually and raised the tax by 3.5 cents per gallon last year.
The excise tax is the largest of the state taxes on gasoline. It was increased in 2010 at the same time that the sales tax on gas was reduced. Changes must be “revenue-neutral” over three years, as judged against how much money would have been brought in under the old system.
For that reason, the board adjustments reflect estimates of gasoline prices — which would increase sales tax revenues — and motorist demand for the coming fiscal year.
Gasoline consumption in California generally has fallen since 2005, and while gasoline prices have edged up in recent weeks, they remain down from a year ago.
The average statewide price of regular on Tuesday was $3.80 per gallon, according to figures from AAA. That was up about 2 cents from a week ago but down 43 cents from a year ago.