Currently the excise tax is 36 cents a gallon. Tuesday’s action will reduce the tax to 30 cents from July 1 through June 30, 2016. Initially, the BOE was considering reducing the tax by 7.5 cents.
“This gas tax cut, although less than originally proposed, is still good news for overtaxed Californians, who currently pay both higher gas prices and higher taxes than residents of other states,” said Vice Chair George Runner in a prepared statement. “But even after this tax cut takes effect July 1, Californians will continue to pay more gas taxes and fees than residents in nearly every other state. In fact, the board’s cut won’t even fully offset the cost of a new ‘hidden gas tax’ that took effect Jan. 1 to help fund high-speed rail and other so-called anti-global warming efforts.”
The BOE explained California drivers pay two types of state taxes on gasoline: sales tax and a per gallon excise tax. Before 2010, drivers paid the full sales tax rate (then 8.25 percent), and an excise tax of $0.18 per gallon. The Legislature enacted a fuel tax swap that now required the BOE to adjust the excise tax rate by March 1 each year.