A
heavily amended bill (ABX8 6, Assembly Budget
Committee) that repeals the sales tax on gas and replaces the revenue with a
gas excise tax was jammed through the Legislature on March 4, one day after
major amendments. The Senate approved the measure 22-10, while the Assembly
vote was 41-32.
With the amendments of March
3, Democrats abandoned their attempt to increase taxes on corporations by
restricting net operating losses to 68 percent for 2010, and disallowing the
unitary group credit sharing, and also abandoned their idea to allow local gas
tax increases (that had been labeled as “fees”).
The bill, which now goes to
the governor, repeals the state sales tax on gas and replaces it with an excise
tax of 17.3 cents per gallon. It also requires the State Board of Equalization
to raise or lower this additional gas tax so it will produce the same amount of
revenue as if the swap had not taken place, and it increases the sales tax on
diesel fuel by 1.75 percent and reduces the excise tax on diesel fuel from 18
cents per gallon to 13.6 cents per gallon.
Speaking on behalf of the
bill, Assembly Budget Chair Noreen Evans said there will be no change in the
tax at the pump. (Cal-Tax: This may not be exactly right. Consumers of
premium will get a slight tax reduction, and consumers of regular will get a
slight tax increase.) Senator Denise Ducheny said the BOE adjustment to the gas
tax is not a COLA, but is intended to keep revenues exactly the same.
Republicans spoke and voted
against the bill. Senate Republican Leader Dennis Hollingsworth said bills that
decrease taxes on some and increase taxes on others should be passed by a
two-thirds vote. He also said that since Senate Democrats tried to turn the gas
tax into a fee and increase other taxes in 2008 by a majority vote, he is
concerned that this maneuver could resurface. Assemblyman Jim Nielsen expressed
concern that as a result of the swap, the state will not keep its promises to
local government.
Cal-Tax continues to oppose
the proposal. It is a net tax increase for taxpayers not subject to the diesel
fuel excise tax who are subject to the sales tax. Cal-Tax also believes that
increasing one tax to offset a reduction in another tax should require a
two-thirds vote. We also have concerns how the BOE will administer the
requirement to raise the gas tax if gas prices go up and sales taxes would have
generated more revenue.
The Legislature continues to
abandon all pretense of good government by not allowing interested parties
adequate time to review amended bills, by not having major bills such as this
one heard in any committee, and by not having floor analyses of the bill on the
Assembly or Senate websites prior to the vote. After the vote, the analyses
were posted for the public to see.
Cal-TaxReports, March 8, 2010
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