Time to Cut Gas Taxes?

Time to Cut Gas Taxes?

The Bureau of Labor Statistics announced earlier this month that energy prices in the U.S. rose 33 percent for the 12 months ending November.  In many regions of California, prices rose even higher.

In the L.A.-Long Beach-Anaheim region, energy prices jumped 35 percent. In the Inland Empire, prices shot up 36 percent.  And in the San Francisco area, prices climbed 25 percent for the 12-months ending October (the latest available data).  Analysts attribute much of the increase to the price of gas.

Californians now pay $4.67 per gallon at the pump, compared to an average of $3.32 for the rest of America. But what most Californians don’t realize is that their dollars aren’t all going to local gas station owners or far-flung oil companies. A whopping 67 cents of every gallon goes to state taxes and 18 cents to Federal taxes.  This prompted one California lawmaker to title his op-ed: “I’m a Democrat and it’s time for our government to stop making gas more expensive.”

Congressman Josh Harder (CA-10) from the Central Valley reminded his colleagues in Sacramento that the massive infrastructure bill passed last month was already going toward fixing roads and bridges.  The “kicker,” Harder wrote, is that “our families are getting taxed twice at the pump for a service — rebuilding our infrastructure — they’re only getting back once.”

He pointed out that state governments, soon to receive billions in federal infrastructure money, “shouldn’t fleece drivers to pay for roads and bridges the federal government is already paying to fix, especially as businesses are recovering from the pandemic. Instead, state lawmakers across the country should freeze and lower these gas taxes to put money back in the pockets of working families.”

Refreshing the memories of Sacramento lawmakers, the gas tax, Harder wrote, was expected to raise $5 billion annually when it was implemented in 2017. But along came a $31 billion budget surplus for 2022 and another $30 billion in federal dollars from the new bipartisan infrastructure law.  Awash in cash, you would think that lawmakers could afford a little generosity and offer some much-needed tax relief to Californians.

Instead, lawmakers choose to double down by subsidizing favored energy sources such as renewable energy while declaring war on fossil fuels, fracking, and nuclear energy.  This approach, wrote PRI senior fellow Wayne Winegarden and author of the study Legislating Energy Poverty, will only “result in higher consumer costs, higher production costs, less energy use, and large economic losses.”

This winter, poor and working-class families will have to choose between filling up their cars with gas to get to work (as much as $70 for a full tank) or keeping their house warm.  Most have no choice but to fill up the tank.

Rowena Itchon is senior vice president of the Pacific Research Institute.

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