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Higher gas prices mean more sales tax for state
By Mark Glover - mglover@sacbee.com
Published 12:00 am PDT Friday, May 2, 2008
Story appeared in BUSINESS section, Page D4
Here's another side to the rising cost of fuel: The higher prices have generated more sales taxes for the state.
The State Board of Equalization reported this week that Californians used 4.5 percent less gasoline – about 58 million gallons – in January this year than they did a year ago.
But because gasoline was more expensive this January than in January 2007 – $3.30 per gallon vs. $2.62, according to the board – $299 million in sales taxes was generated, up $50 million from a year ago.
That may not mean much, given that other revenue has dropped dramatically and the state's budget deficit stretches beyond $10 billion.
Yet, over time, gas taxes add up to seriously large numbers.
In 2007, when the average statewide price of gas was $3.12, the Board of Equalization said the state of California pulled in $3.6 billion in gas sales taxes, up from $2.1 billion in 2003, when gas could be had for $1.88 a gallon.
That money, however, does not go into the state's general fund. Excise and sales taxes on fuel go to the state transportation fund.
The state excise tax on gasoline and diesel is 18 cents a gallon, and the sales tax depends on where you live, with a range of 7.25 percent to 8.75 percent.
Federal gas taxes total 18.4 cents for a gallon of gasoline and 24.4 cents for a gallon of diesel. Republican and Democratic presidential candidates John McCain and Hillary Rodham Clinton have proposed suspending the taxes for varying lengths of time to aid hard-pressed consumers.
According to the federal government, suspending the gas taxes would produce a savings to consumers of around $200 million a day.
A suspension would the cost the state about $9.9 million a day, according to the Board of Equalization.
About the writer:
- Call The Bee's Mark Glover, (916) 321-1184.
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