Assembly Panel OKs 2.8-Cent Gasoline Tax Cut

Some slight relief from the high cost of gas was approved Monday by a legislative committee, in the form of a proposed reduction of 2.8 cents per gallon in the sales tax levied on vehicle fuel.

The bill by Assembly Speaker Curt Pringle (R-Garden Grove) to eliminate “a tax on a tax” passed 8 to 1 in the Assembly Revenue and Taxation Committee. Similar easy passage is expected before another committee and eventually the full Assembly.

In the state Senate, however, AB 2640 competes with a Democratic-backed measure that would cut the tax at the pump even more--by 10 cents a gallon at current prices--and additionally contains a payback provision to make up the revenue loss.

The speaker’s measure to eliminate the portion of gasoline sales taxes that is imposed on state and federal excise taxes would cost government an estimated $422 million a year--$242 million from the state treasury, $109 million from local governments and $71 million from dedicated transit funds.

“The recent spike in California gas prices has hurt all of Californians, especially those who rely on [cars] to get to work or school,” Pringle said. “This measure eliminates the unfair double taxation of gasoline and will defray the additional burden that has been placed on all of us.”

He said that since Feb. 1, when gas prices began their upsurge, California motorists have paid an increase of $43.6 million because of the increase in gas taxes--”just the increase alone,” Pringle said.

He said he was moving his bill now, with motorists bemoaning high gas prices, when the “ideas have steam behind them.”

However, mirroring the stalemate in Washington over similar measures, Pringle’s bill appears to be headed for a roadblock in the Senate, similar to what the state Senate measure is facing in the Assembly. The issue is likely to remain in legislative gridlock at least until legislators sort out other tax and budget issues facing the state.

The bill by Democratic Sens. Daniel E. Boatwright of Concord and Mike Thompson of St. Helena is stuck in the same Assembly committee that approved the Pringle measure Monday. Chairman Nao Takasugi (R-Oxnard) has said there will be no action on the Boatwright-Thompson bill at least until next month.

The Senate bill, SB 14, seeks to retrieve approximately $500 million in proposed tax cuts for motorists by imposing a 6% “excess profits” tax on the oil companies.

Pringle’s bill, meanwhile, will be in trouble in the Senate on arrival, Senate leader Bill Lockyer (D-Hayward) said.

Declaring himself a “no” vote, Lockyer said: “California has more problems than other states with inadequate investments in transportation. . . . It isn’t the time to be cutting revenues. If [Pringle] is really concerned about gas prices, maybe he should talk to his oil company buddies about gouging [consumers].”

Gary Foster, Pringle’s press secretary, replied that the Senate measure, with its component requiring oil companies to defray costs, “is almost certain to result in the companies passing the cost on to consumers.”

As for the revenue loss that Lockyer refers to, he said, “The money belongs to California taxpayers to begin with, and a rebate for them, in a realistic manner, is what the speaker’s measure sets out to accomplish.”