California Excise Tax on Gas Drops By 6 Cents

The reduced tax rate will be in effect until June 30, 2016.

California's excise tax on gasoline dropped 6 cents to 30 cents per gallon on Wednesday and will remain at that price for a year.

State Board of Equalization Vice Chair George Runner announced the decrease Tuesday after the board approved the reduction at its February meeting.

"This is welcome news for overtaxed Californians who had essentially given government an interest-free cash advance," Runner said in a statement. "The lower rate will help correct the over collection of tax brought about by lower gas prices."

The new tax rate will be in effect until June 30, 2016. But even with the lower rate, California will have one of the highest gas taxes in the United States.

"Californians should know, however, that this cut won't even fully offset the cost of the 'hidden gas tax' that went into effect this year to fund Governor Brown's High Speed Rail project and other so-called anti-global warming efforts," Runner said.

Dave Clegern of the California Air Resources Board said in an email that Runner was likely referring to the cost greenhouse gas emitters pay for the carbon allowances they have to buy under the cap-and-trade program as the 'hidden gas tax.'

Under the cap-and-trade program, fuel suppliers are responsible for the greenhouse gas emissions from their fuels.

"We have no role in setting fuel prices, and how a supplier chooses to pass along any costs they might incur is entirely at their discretion," Clegern said. "Projections when fuels first came into the program January 1 is that the price of a gallon of gas might increase 10 cents if suppliers passed through their entire cost from the program. That is about what happened, as far as we can tell. The vast majority of price increases since that time are due to the workings of the oil industry, not cap-and-trade."

Clegern added that along with other AB 32 greenhouse gas emission programs, the overall cost of driving for Californians is expected to be reduced by 30 percent by 2020. He also said the 10 cent a gallon increase could be offset if drivers inflate their tires to the appropriate psi.

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