The state Board of Equalization raised the excise tax on gasoline another $0.035 on Monday, as part of the Fuel Tax Swap program.
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The Fuel Tax Swap program that took effect on July 1, 2010 and allows the state to raise excise taxes on gasoline, to keep revenue constant without raising sales tax on other merchandise.
George Runner, former state senator and member of the Board of Equalization said that he thought the program would hurt California motorists who are trying to save money.
“If (gas) consumption went down because people are buying more efficient cars, then the tax has to go up,” he said.
The rate is adjusted yearly based on past fuel consumption and prices, in addition estimated future prices.
Runner said that two cents of the tax hike is based on that estimation of future prices.
California’s sales tax rate will remain 7.5 percent, while the excise for gasoline is now $0.395, almost four cents more than the previous period, July 1, 2012 – June 30, 2013.
The sales tax on gasoline also remains constant, at 2.25 percent, much lower than state sales tax for other merchandise, at 7.5 percent. Raising the excise tax allows these rates to remain the same. Money generated from the fuel excise tax goes toward mass transit projects and public roads in the state.
The requirement to keep the sales tax at a constant rate by adjusting excise taxes went into law under Gov. Arnold Schwarzenegger in 2010, said Venus Stromberg, spokeswoman for the California Board of Equalization.
Runner originally voted against it, claiming that it made tax law too confusing for taxpayers.
“(It’s) a very hard-to-understand formula that the legislature put together about four years ago, which makes it very difficult for people to really understand how gas is taxed,” he said. “I voted against it because it’s confusing and it’s just not a right way treat taxpayers.”
For a copy of the special notice released by the Board of Equalization, click here.
Fuel Tax Swap FAQs are available here.
Samantha Tata and Geoffrey Eisler of NBCBayArea.com contributed to this report.
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Source: Santa Clarita News