Many Say They Will Have No Choice but to Swallow Gas Tax
At a Mobil service station in downtown Los Angeles, Michael Pracha leaned against his black station wagon Tuesday and watched with resignation as the electronic digits tallied his gasoline bill with dizzying speed: $23, $24, $25.
For Pracha, 36, who drives as many as 800 miles a week in his job as a garment industry production manager, there is nothing abstract about the proposed 12-cent-a-gallon tax hike that is part of the federal deficit-reduction package.
“It’s bad,” he said between bites of an ice cream sandwich. “But again, there’s nothing you can do. You still have to go to work, you have to travel and you have to pay the extra money.”
The proposed federal gasoline tax would come on the heels of a 27.1-cent-a-gallon increase that has raised the average price of regular unleaded gasoline to $1.346 a gallon since the crisis in the Persian Gulf began, according to the American Automobile Assn. In California, price increases have included a 5-cent-a-gallon voter-approved state tax hike that went into effect Aug. 1, the day before Iraq invaded Kuwait.
The proposed federal tax would place a further burden on motorists, particularly low-income consumers, and squeeze service station operators, critics said. The tax, which would be phased in incrementally, has drawn fire from consumer groups, service station organizations, petroleum marketers and the automobile association, which called it “reckless public policy in the face of a recession.”
Observers say a new federal tax would cut demand for gasoline only slightly. Within a year, it would drop 1% to 1.5% from its current level of 7.7 million barrels a day, economists estimated. Still, at around 100,000 barrels a day, “that’s no small potatoes,” said Gary N. Ross, president of Petroleum Industry Research Associates of New York.
Some motorists have already cut gasoline consumption and altered their driving habits. “I’m driving less and making more use of my time when I’m on the road,” said Ed Rodieck, 25, an Orange businessman who drives 60 to 90 miles a day. “I’m starting to ride-share a lot more . . . (And when I’m in downtown Los Angeles), I do a lot more walking . . . and take the DASH bus.”
Motorists who can’t cut back stand to suffer the most, critics said.
“I can’t ride-share with anybody,” said Gerry Walling, a 43-year-old legal librarian from Monrovia who drives 45 to 130 miles a day.
“I have to have my own car because of my obligations to go to other offices,” she said as she filled her tank at a Unocal station downtown. So far, she added, the price hike “hasn’t affected my family (financially). But it may. I don’t know how it’s going to affect us if it keeps going up.”
“It’s a regressive tax,” said Nicholas Fedoruk of the consumer group Citizen Action in Washington. “It has the largest impact on the low- and middle-income consumers.”
Motorists would not be the only ones to suffer. The tax could add to service station owners’ costs of processing credit card transactions, cut sales volumes and increase cash flow requirements, industry officials said.
Robert Weiss, who owns Bob’s Chevron in Anaheim, said the price run-ups in the past two months have turned motorists away. His sales volumes have fallen by 15%, he said.
Although prices are higher, he says his per-gallon gross profit margin, out of which he pays rent and overhead, has actually shrunk. “The lower our volumes go, the more rent we pay” to Chevron, he added. Higher taxes will drive away even more customers, he said.
Although Weiss said he has not suffered serious financial problems, others might not be so lucky. The tax “affects the marginal dealer,” said Stephen Shelton, executive director of the Southern California Service Station Assn. in Irvine.
