February 24, 2015 - Culver City – Members of the California State Board of Equalization (BOE) today voted to lower the excise tax rate for gasoline by $0.06 for Fiscal Year (FY) 2015-16 during their meeting today in Culver City.
“This gas tax cut, although less than originally proposed, is still good news for overtaxed Californians, who currently pay both higher gas prices and higher taxes than residents of other states. But even after this tax cut takes effect July 1, Californians will continue to pay more gas taxes and fees than residents in nearly every other state. In fact, the Board's cut won't even fully offset the cost of a new ‘hidden gas tax’ that took effect January 1 to help fund high speed rail and other so-called anti-global warming efforts,” said Vice Chair George Runner.
Since 2010, the “fuel tax swap” law has required the Board to adjust this tax rate by March 1st of each year. With today’s action, the excise tax rate on gasoline will be $0.30 per gallon from July 1, 2015 through June 30, 2016. The current excise tax rate of $0.36 is in effect through June 30, 2015.
Drivers pay two types of state taxes on gasoline -- sales tax and a per gallon excise tax. Before the “fuel tax swap” took effect, drivers paid the full sales tax rate (then 8.25 percent), and an excise tax of $0.18 per gallon.
The excise tax on gasoline pays for public road improvements and mass transit. In FY 2013-14, the BOE collected nearly $5.8 billion for the Motor Vehicle Fuel Account, Transportation Tax Fund. The sales tax on gasoline primarily funds local government programs.
The “fuel tax swap” lowers the sales tax rate to 2.25 percent on gasoline and requires the BOE to set the per gallon excise tax rate, so drivers pay the same amount of state taxes on gasoline as they would have paid under the prior tax structure.
In addition to projecting sales tax revenue that would have been generated under the old tax structure, the law also requires the BOE to review the actual excise tax revenue generated in the prior fiscal year and subtract that from projected revenue for the coming fiscal year. This calculation determines the coming fiscal year’s excise tax rate.
Watch this video explanation to see how it works.
California State Board of Equalization Members Lower Gasoline Excise Tax Rate by 6 Cents
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