All praise to the State Board of Equalization, which voted Tuesday to cut California’s gas tax by 6 cents. This is a step in the right direction, but politicians in Sacramento may soon reverse these gains with an ill-timed and unnecessary gas-tax hike.
If Gov. Jerry Brown or state Assembly Speaker Toni Atkins went to a gas station today, they would find prices roughly 75 cents lower per gallon than they were a year ago. This happy fact is responsible for spurring economic growth and helping millions of Californians save money, but lawmakers are now debating whether to limit those gains by raising taxes on gasoline.
This is the last policy they should consider. Low prices at the pump are great for Californians, especially lower-income families and the middle class. Our state spends approximately $3.25 billion per month on gas. This represented 12 percent of low-income families’ earnings in 2013, when gas prices were higher than they are today. The middle class spends more on gasoline than any other group.
Economists now predict that, thanks to lower gas prices, California families will each save between $650 and $1,200 this year. We’re also saving money at the store, because the cost of goods is lower when shipping them is less expensive. That’s great news for everyone, whether they live paycheck to paycheck or are saving for a family vacation.
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It’s also good news for our economy, which is expected to grow faster now that families have extra money to spend. Californians already pay some of the highest gasoline taxes in the country, so we’re already missing out on enough economic growth as it is.
Gas tax proponents respond that now is the perfect time to make such a change because it won’t harm California families or stifle economic growth as much as it would if, say, prices were still above $4 a gallon. But this argument suffers from serious flaws.
Prices won’t be low forever – or possibly even much longer. Indeed, pump prices are already rising in California, with the average topping $3 a gallon for the first time since early December. It’s easy for politicians to hide the effect of higher gas taxes while prices are low, but the same can’t be said when gas gets more expensive.
More importantly, it sets a dangerous precedent if our politicians start passing tax increases when they think we won’t notice, or when they think it won’t hurt as much. And it’s especially rich that lawmakers are considering making a gas tax hike “temporary” – a promise that we’ve learned never to trust.
This isn’t to say that Sacramento shouldn’t fund infrastructure projects such as roads, freeways and bridges. If our state truly needs to spend more in these areas – and that may not be necessary, as there is surely wasteful spending that can be cut – it should either take funds from this year’s expected $2 billion budget surplus or cut spending in other areas. The rating agency Standard & Poor’s has said that such cuts – not tax increases – helped balance the state budget over the past four years, and that trend should continue.
In short, politicians should let us get the most out of low gas prices for as long as we can. The Board of Equalization’s 6-cent tax cut is a step in the right direction. Now we need the governor and state legislators to slam on the brakes on the gas tax.
David Spady is California state director of Americans for Prosperity, a free-market advocacy group based in Arlington, Va.