A $400 tax rebate to offset California’s high gas prices? Here’s how it would work
A group of Democratic state lawmakers on Thursday proposed sending every California taxpayer a $400 tax rebate check to reduce the financial pain they’re suffering because of gas prices and the rising costs of everyday goods.
But it’s by no means a done deal, so don’t expect to see any checks in the mail next week.
Here’s what is known so far:
The proposal comes as pressure mounts to help Californians struggling with prices at the pump, as well as increases in the costs of food, rent and other daily essentials.
Who would receive tax rebates and when would they be sent out?
All Californians who pay state income taxes would receive a $400 rebate, regardless of their income. So, in theory, billionaire Facebook co-founder Mark Zuckerberg and the manager of your local In-N-Out would both receive a rebate of $400. Because the payments would be sent to each individual taxpayer, married couples would receive $800.
Assemblymember Cottie Petrie-Norris (D-Irvine) said the rebates should be sent out as soon as possible and that the state should not wait until the Legislature and Gov. Gavin Newsom agree on the entire state budget, which is traditionally completed in late June.
“Our goal is to be able to do this in the spring, and all the folks here are going to be pushing really, really hard to make that happen,” Petrie-Norris said at a news conference Thursday outside the state Capitol.
The hesitation to tinker with California’s steep gas excise tax of 51 cents per gallon demonstrates just how politically sensitive the issue remains.
Petrie-Norris said the intent of the group of Democratic lawmakers — which included moderate legislators — was to provide as much relief as possible to as many Californians as possible. But she acknowledged that decisions about who would receive a rebate and how much they would get will be hashed out in negotiations with the legislative leadership and the governor.
Assembly Republican Leader James Gallagher of Yuba City said he supports the proposed tax rebates, especially since the Newsom administration expects a $45-billion budget surplus. Gallagher wants to suspend the state gas tax as well.
“There’s an urgent need right now with the high costs across the board, not just gas, but all of our daily living costs have increased. People need relief now,” Gallagher said.
That question is at the center of ongoing discussions inside the state Capitol as California grapples with a surge in gasoline costs and is projected to have a record-high budget and surplus.
Petrie-Norris said the $400 tax rebate figure was used because it equals the amount a typical Californian pays in state excise taxes on gasoline per year. She said California drivers on average fill up their gas tanks 52 times a year. California’s highest-in-the-nation gas tax is 51 cents per gallon.
“That’s a yearlong gas tax holiday,” she said.
A group of legislative Democrats has jumped out in front of negotiations on a cash-back plan to offset the impact of gas prices
Why not just cut the state gas tax?
Republican lawmakers are pushing for a six-month suspension of the state gas tax, arguing that it would be the most effective way to provide direct financial relief to Californians reeling from high gas prices.
“The thing about a gas tax suspension is that it is naturally targeted at folks who are feeling the pain,” said Assemblymember Kevin Kiley (R-Rocklin). “People who are driving the most because let’s say they live in a rural area, or maybe they have to commute a long distance to work, or maybe they have several kids they have to drive to school, the benefit will be commensurate with the pain that they’re feeling right now.”
Kiley’s bill to suspend the gas tax failed in the Democratic-controlled state Assembly on Monday, though the lawmaker said he plans to force another vote on the proposal next week.
Assembly Speaker Anthony Rendon (D-Lakewood) and Senate Pro Tem Toni Atkins (D-San Diego) have said cutting the gas tax would endanger critical repair work being done on California’s crumbling roads, bridges and other essential transportation projects. They also said it would not provide substantial financial assistance to Californians.
Both the governor and Democratic lawmakers also said there’s no guarantee that oil companies would lower gas prices if the tax is suspended, warning that the companies might pocket the savings instead of passing them along to drivers at the pump.
Kiley dismissed that as political gamesmanship. He noted that Democratic Gov. Ned Lamont of Connecticut called on lawmakers in his state to suspend one of two taxes on gasoline by 25 cents per gallon until the end of June. Kiley also noted that the nonpartisan Legislative Analyst’s Office said in a February report that cutting California’s gas tax would save drivers money when filling up.
“Available evidence suggests that lower excise taxes likely would result in lower retail prices. The exact effect on retail prices is uncertain, but most of the change in the tax rate likely would be passed through to prices at the pump,” the report stated.
Gas prices are high across California, and it’s unclear when prices will go down. But, there are ways to save money on gas. Here are some tips.
What are the odds that a $400 tax rebate will pass?
It’s clear that the governor and both Democratic and Republican leaders in the Legislature want to provide tax relief to Californians hit hard by high gas prices as well as increasing costs for food, housing and other daily needs. Because of the give-and-take of most spending negotiations in Sacramento, however, the odds of the $400 tax rebate proposal passing as is are not high.
Newsom and the Legislature’s Democratic leadership continue to negotiate over the best ways to help alleviate the financial pain at the gas pump, and some of the ideas that have been discussed include sending tax rebates to Californians with registered cars and sending out stimulus checks. In his January budget proposal, Newsom called for canceling an increase in California’s gas tax scheduled for July, indicating that he’s not completely opposed to tinkering with the state’s fuel taxes.
A tax rebate, or stimulus, could also be tailored for Californians most in need. In response to the COVID-19 pandemic, the governor and Legislature approved a “Golden State Stimulus” program that sent out $600 checks to residents who earned up to $75,000 a year.
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