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CA Raises Gas Tax to Fund Road Projects

Thursday, November 2, 2017

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Despite vocal opposition from Republicans, the state of California has increased its gas tax by several cents as of Wednesday (Nov. 1), part of a larger plan to create and maintain infrastructure statewide.

The gas tax increase tacks on 12 cents for gasoline, and diesel will see an increase of 20 cents, noted The Los Angeles Times.

California Gas Tax and Other Fees

According to the Times, the tax increase is intended to help raise $5.2 billion annually to help with the repair of the state’s decaying infrastructure, as well as improving mass transit and allowing for the creation of new bike lanes while reducing traffic congestion. Currently, the state is facing a total of $130 billion in needed funding for the transportation sector.

The bill, signed by Gov. Jerry Brown, increased the state excise tax on gasoline from 29.7 cents per gallon to 41.7 cents. For diesel, the excise tax increase is 20 cents, from 16 cents per gallon to 36. Additionally, for drivers who use diesel, the sales tax on the fuel will increase from 9 percent to 13 percent.

Gasoline pump
Free Culture NYU, CC-BY-SA-3.0, via Wikimedia Commons

Despite vocal opposition from Republicans, the state of California has increased its gas tax by several cents as of Wednesday (Nov. 1), part of a larger plan to create and maintain infrastructure statewide.

In comparison, the state of Pennsylvania increased the state gas tax to 58 cents early in 2017. Including the 18.4-cent federal excise tax, the total tax on gasoline in that state is 76.4 cents a gallon—the highest gas tax in the nation. For Pennsylvania drivers, this step was the final phase of Act 89, also known as the Transportation Bill, which was created mitigate a lack of funding for infrastructure work, noted Philadelphia Magazine.

California’s take on increasing funding for transportation includes a new fee, however: an annual vehicle fee. For those cars worth less than $5,000, the fee is $25 a year. For cars worth more than $60,000, the fee will be $175. For electric car owners, a $100 fee will apply starting in 2020.

“These investments will create good-paying jobs, improve traffic safety and expand public transit access in communities across the state—without burdening our future generations with debt,” Senate President Pro Tem Kevin de León, a Democrat, told the Times.

Republican Opposition

Despite de León’s optimism, California Republican party members have expressed disagreement with the tax increases, citing that the state should divert funding away from wasteful spending—which includes bullet train project that some say is not cost-effective—and direct that money towards the transportation sector.

The gas tax increase already promises to be a hot-button topic for the 2018 election.

"The state is more liberal and receptive to arguments for government spending," John J. Pitney Jr., a politics professor at Claremont McKenna College, told the Times. "The Republican Party is much weaker and less capable of getting its message to the voters."

Federal Gas Tax

Despite California Republican opposition to the state gas tax increase, President Donald J. Trump’s chief economic adviser raised the possibility of increasing the federal gas tax sometime next year to help pay for the administration’s $1 trillion infrastructure plan, noted Bloomberg Politics.

The federal gas tax has not increased since 1993, which can be attributed to opposition from the Republican party and others who are not inclined to raise taxes.

Due to inflation and increased fuel economy, federal revenue from the 18.4-cent tax on gas and the 24.4-cent tax on diesel has declined, leading to a call for increasing the tax in order to sustain the federal Highway Trust Fund project, which provides funding to states for infrastructure work.

Idaho Republican Representative Mike Simpson told Bloomberg he would support such an increase.

“It’s a user fee,” Simpson said. “We’ve got to convince people that the money goes to roads and bridges and not all the other bull.”

While President Trump has indicated he “would certainly consider” the increased gas tax, the White House emphasized that the president did not endorse the idea, and that an intensive look at overhauling the tax code would come first.

   

Tagged categories: Funding; Government; Infrastructure; NA; North America; Oil and Gas; Program/Project Management; Project Management

Comment from Josh Skinner, (11/2/2017, 2:43 AM)

I've seen this playbook before. Convince the people of the State of California that a tax increase is going to benefit schools, public safety, infrastructure, etc. and then watch the money disappear into the "General Fund". Once the money is in the "General Fund", you'll never know exactly how it was spent...


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