Business & Real Estate

Statewide excise tax rate on gasoline to decline

Effective Tuesday, the statewide excise tax rate on gasoline will decline by 3.5 cents, but that will not necessarily equate to lower prices at gas pumps.

The state Board of Equalization in February approved lowering the tax from 39.5 cents to 36 cents. It will remain at the level until June 30, 2015.

Under guidelines of a complicated gas taxes formula signed by then-Gov. Arnold Schwarzenegger in 2010, BOE annually adjusts the state gas excise tax rate by March 1 each year. BOE is anticipating relatively stable gas prices in the upcoming fiscal year and in-state gas consumption has remained flat in recent years; both factors are considered by BOE when weighing excise tax adjustments.

Historically, the swap has had little or no effect on at-the-pump gas prices. When gas prices do go up, consumers pay a corresponding higher amount in sales tax. The statewide baseline sales tax on gas is 2.25 percent, and additional taxes vary by jurisdiction.

Other factors can prompt gas price increases. Those factors include production interruptions at refineries and the price of crude oil.

Gasoline sales tax revenue funds local government programs; the state excise tax on gasoline funds statewide highway and mass transit projects.