It’s not surprising that California Gov. Gavin Newsom and the state’s Democrat lawmakers want to create a new government program to provide residents relief from exorbitant gas prices in the state (in the form of $400 rebate debit cards) instead of taking at least one extremely easy and immediate action: pausing gas tax collection for a few months or longer. Of course, simply pausing tax collection doesn’t create more bureaucracy to keep public union pencil-pushers busy, doesn’t give Newsom an opportunity to send people money with a note signed, “Love, Gavin,” close to election time, and doesn’t allow him to point out special interest groups he’s including, i.e., illegal immigrants.
In addition to using a crisis to create a vote-buying, virtue-signaling scheme, there are other reasons Newsom won’t just do the simple thing. But first, here are the components of Newsom’s plan:
- To all Californians that have an automobile (including electric and motorcycles) registered under their names, send a $400 debitcard
- People with more than one vehicle registered in their name can only get a max of $800 – but there’s no household cap.
- $750 million to transit and rail agencies “to offer free or substantially reduced fare” and encourage the use of public transit
- For one year, stop charging diesel but not gasoline sales tax
- The yearly inflation increase on diesel and gas excise taxes is being halted (the next one will hit in July).
Since Democrat leaders in the legislature have their own plan and fundamentally disagree with a universal plan with no income qualifications, it’s doubtful that Newsom’s plan will pass as-is. Regardless, one of the biggest issues with either plan is that it won’t provide any relief for months, if ever (if the problems Californians have had with receiving pandemic unemployment benefits are any indication). Californians fear that they won’t be able to afford housing due to skyrocketing gas costs and seek immediate relief. Why is Democrats so stubborn?
Simply put, if they pause the gas tax, they won’t have control over who receives what, and when; they will have a much smaller pot of money to play Oprah with; everyday Californians will see that lower taxes lead to economic growth; and, it will be crystal clear that the exorbitant gas taxes they’ve been paying for years haven’t gone to fixing roads and bridges.
As Asm. Kevin Kiley (R-Rocklin), says:
Because they can control who receives the money, and when it is delivered to them, corrupt politicians will prefer “rebates.”
— Kevin Kiley (@KevinKileyCA) March 24, 2022
California Democrats are against the gas tax being stopped (which is also the state excise duty tax). They argue that excise-tax funded infrastructure projects will be damaged or cancelled. Given the state’s budget surplus (the one Newsom is constantly bragging about), that doesn’t have to be the case – unless Dems want it to be the case. It is what they desire to see. They want it to be the case because they already have plans for the budget surplus – and that plan includes lots and lots of targeted handouts. It would make a fantastic campaign theme in November, they also wish it was true. So that argument is bogus and they know it, but they’ll continue making it – until they decide to give people “crumbs” disguised as $400 debit cards.
But it’s not just the current surplus they’re concerned about. If the gas tax is paused, next year’s funding for current/planned infrastructure projects will be impacted and they’ll need to use some of the surplus for that.
If the gas tax is suspended, this will have a major impact on another source of income.
Californians are currently paying 51.1 cents each gallon in state excise and 18.4 cents respectively in federal excise taxes. According to the Legislative Analyst’s Office, other state policies and regulations relating to underground storage tanks, cap and trade, and low carbon fuel standards add 43 cents a gallon to gasoline prices, meaning that Californians are paying $1.12 per gallon in excise taxes and fees.
We also have the state and local sales taxes, which vary from 2.25 percent to 5.75% per gallon. California is one of 11 states with gasoline taxes. Newsom proposed to suspend these taxes for a year but not diesel. Here’s the clue to another major reason Newsom won’t pause the collection of state excise taxes: since sales tax is calculated on the actual sale price, the state’s coffers are filling up with gas sales tax revenue. The chart from LA Almanac below shows that gas prices today are nearly twice what they were before the pandemic.
Sales tax revenues aren’t subject to the same restrictions as excise tax revenue, making them even more valuable to corruptocrats who want to use working Californians as an ATM funding their addiction to buying votes and collecting kickbacks.
California Assembly has only voted to suspend gas tax. Democrats either support it, or for the purple districts, they abstain. The public is becoming louder every day. Are Gavin Newsom, the Democrats going to stick with their anti-worker policies, hoping that voters forgive them when those debit cards arrive in mailboxes? Or is the pressure too great?
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