Californians Aren't Buying Enough Gas. Solution: Raise Gas Taxes!

State will soon have highest rate in the country


The new normal
Credit: Karin Heldebrand Lau,

California had a $157 million shortfall in gas tax-revenue for fiscal year 2012 and gas consumption by Californians has dropped by more than 1 billion gallons a year since 2006. So of course the state is going to respond by raising gas taxes. Jonathan Horn at the San Diego Union-Tribune has the forehead-slapping details:

The tax you pay on a gallon of gas will rise by 3.5 cents in California come July 1.

The state Board of Equalization voted 3-2 on Thursday to increase the excise tax about 10 percent, from 36 cents per gallon to 39.5 cents per gallon.

The increase is partly due to a $157 million shortfall in gas-tax revenue in fiscal 2012, and also a projection of less consumption by California drivers.

After the increase goes into effect, California will have the highest gas taxes in the nation at about 70.1 cents per gallon. The state is currently just behind New York.

The excise tax is used for highway projects, the Board of Equalization notes. A recent report from the Reason Foundation (the non-profit that publishes this site) showed that California is essentially the only state whose highway infrastructure hasn't improved in the past 20 years. But then, the excise tax is also used for mass transit projects, meaning Californians may end up paying the highest gas taxes in the country to fund that godforsaken high-speed train they don't even want anymore.  

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  1. Taxes will be raised until the economy improves!

  2. People are driving less, so less revenue, which requires making the cost of gas higher, which will make people drive less, which will bring in less revenue, which requires making the cost of gas higher, which will make people drive less, which will bring in less revenu, which…

    1. It’s not just that people are driving less, it’s that we have passed absurd CAFE standards and massively subsidized hybrid vehicles in an effort to drop demand for gas and now that the tax receipts from gasoline are smaller, they look around confused and don’t seem to understand where “all your money that belong to us” is. Same bullshit with the cigarette taxes: the govt taxes something claiming they want less of it, then when consumers respond to incentives and give them less of it, they wonder why they’re not getting the tax revenue they expected.

    2. Doesn’t that sound like all keynesian thought?

  3. So… demand goes down, and the State raises prices? Does the state think that will increase demand? Or lower demand?

    Did anybody in any government ever take Economics 101? It is the first lesson in the first lecture. Even if you dropped the class, you sat through the basic supply/demand lecture.

    1. “The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.”

      ? Thomas Sowell

    2. No EDG. Economics is just white paternalism. Why would any prog want to take that class?

  4. The state Board of Equalization

    Words fail.

    1. I’m more stunned that the tax passed by only a 3-2 margin.

      1. Perhaps they upset it wasn’t higher, since that would increase equality. Or something.

        1. Nope! There were two Republicans on the Board who were against it.


          Board member George Runner, who voted no on the tax increase, said he took issue with a lack of transparency on the tax increase, and he said the state should not be in the business of predicting the volatile gas prices. He said the catch-up from fiscal 2012 only represented 1 cent of the 3.5 cent increase.

          “This has nothing to do with good tax policy,” he said. “This had everything to do with trying to solve a budget problem in 2010.”

  5. Jeebus H Mohammed, I am governed by fucking idiots.

    They steal my money and hand it out to their progressive brothers as a fucking subsidy to buy a $35k Prius instead of a Lexus, and then when they predictably sell less gas as a result, they try to find every fucking way possible to extort more money from me because they can’t figure out why they’re running short.

    1. All they know is theft…and steal…and rape.

      1. You said rape twice.

      2. You not good grammar… you’re english not very goodly

    2. Jeebus H Mohammed

      I just blew snot out of my nose.

      *giggling uncontrolably

    1. Fuck their politics but I’m going to miss it when it sinks into the sea. Half of my favorite brews are made there.

      1. I see a market opportunity.

        Montana has fantastic microbrews. And soon beachfront property.

      2. Noone’s gonna miss reason when CA sinks thats for sure.

  6. re: EDG reppin’ LBC

    Math is hard.

    1. Math is hard. Let’s go taxing.

  7. I must admit, now that I’m in the process of divorce and free to roam about wherever I damn well please, I am going to look seriously at abandoning this dystopia. Not sure where I’ll end up going, and it sucks because I do love cities on the ocean and all of the other areas that I would naturally be inclined towards climate and geography wise are nearly as fucked as California (Oregon and Washington).

    1. there are other oceans, including some prettier than the Pacific. The Gulf of Mexico comes to mind.

      1. Texas, Florida, and even areas of the deep south are all tempting to a degree, especially where it concerns governance. But I like cold and cloudy with brisk rain sprinkled in.

        1. hurricane season and most summers can supply the brisk rain well enough. Cold, not so much.

          1. What wareagle said. Other than that, Texas is great. Perhaps New Hampshire?

            I am sorry for your troubles. Divorce isn’t fun at all.

            1. It’s not actually that bad in my case. We’ve only been married for a little over a year with no kids and no property. We’ll be able to do an summary dissolution that spares us legal fees and fighting.

            2. NH is nice, except that they make up for the lack of sales and income taxes with brutal property taxes.

              1. Find a town with lots of rich people with big houses and few children and it’s not so bad. I live in a town like that and the rates are like half what they are in some nearby towns.

                1. I need to find an excuse for a trip south so I can stock up on fireworks again. And cheap booze. Maybe I’ll offer to take the wife to NERD.

        2. Charleston and Wilmington have real weather, and the Outer Banks feel like the very essence of spiritual conquest when you are kayaking alone, but I have to admit, Wilmington is a pretty crappy city.

          1. I like Savannah over Charleston; much of the charm, less of the pretentiousness. Tybee is right there and Jekyll not far away.

            1. Savannah is wonderful. I can’t believe its been more than a decade since I have been back there.

        3. No oceans, but we do gots lots of corn fields in Iowa.

        4. Cold and cloudy with brisk rain?

          Juneau, then?

    2. California is the gorgeous blonde who’s stacked and great in bed and you just don’t want to leave her even when you realize she’s cleaned out your bank account and is cheating on you.

      That such a beautiful state with so many resources and so much potential can turn out to be a ravenous evil hag, it’s so sad,

  8. No no no, the problem isn’t that they’re not buying enough gas! It’s that revenues are down! And everyone knows that the only way to increase revenues is to raise taxes! This way, people who pollute the Earth will have to pay more money and the budget shortfalls will be decreased. It’s a win-win, really.

  9. Just wait until this kicks in:…..l_standard

  10. Fucking incentives, how do they work?

    1. They don’t. Anything with “incentives” in it must be just another Rethuglican teabagger talking point.

  11. Might want to explore if you’re on the wrong side of the Laffer curve, California.

    Free hint: you are.

  12. So I’m catching a taxi in D.C., I think it was an Anacostia taxi, not sure. Anyway there was a notice in the taxi. It said that there was a fuel surcharge on all taxi trips, until such a time as the price of gasoline had fallen to the point where the surcharge was no longer necessary.

    The price of gas is too high so you put a surcharge on taxi fares? WTF? It’s been a couple of weeks now, and I still can’t figure out what possible rationale could have been behind this.

    1. stealth fare increase? Curious to see if “the point where the surcharge is no longer necessary” actually comes.

      1. stealth fare increase

        Yup. Easier to add a surcharge than incur the wrath that a public fight to raise fares would start.

        1. But they are private taxis, so fares don’t go the government anyway.

          1. Governments have a history of loving to fix rates, especially in transportation.

    2. Doesn’t seem too surprising to me. Most delivery companies have been doing the same for a long time. If your rates don’t cover your expenses, you have to do something.

      1. Zeb, this is a government surcharge on a private transaction. I could understand the government temporarily raising the fare cap, but placing a tax on fares doesn’t help the taxis cover their expenses.

  13. California is essentially the only state whose highway infrastructure hasn’t improved in the past 20 years.

    Those public worker pensions don’t pay themselves, you know…

  14. The state Board of Equalization?

    Did they pull that name from Atlas Shrugged?

    Californians creep me out.

    1. You’ve been wiki’d!

      The State Board of Equalization was created in 1879 by an amendment to the California Constitution. Its original mandate was to ensure that property tax assessments were uniform and equal across all counties in the state.

      And then mission creep set in…

      1. Road to hell…something, something.

        1. Hasn’t been repaved in 20 years because of a lack of revenue?

          1. I drove up the 101 last September and found it to be a smooth and wonderfully paved road. I could smell the sweat of over-compensated labor as the asphalt heated up through the day. Either that or my sister-in-law had the burrito shits.

            1. Why do Californos insist on putting the word “the” in front of their highway designations?

              And why are there no exit numbers on THE 101? It’s like they are so arrogant that they think the entire rest of the world should know every shit ass town in CA by heart.

              1. Mile markers would ruin the scenic beauty of illegals picking lettuce still glistening from the morning dew.

              2. Why do you need exit numbers? Don’t you know the street you want? If the exit you want is Main Street then take the Main Street exit. Sheesh.

                As for SugarFee’s account of smooth and wonderfully paved road, he must have driving that half mile stretch over by Paso Robles that actually has paving.

                1. Yeah what is this ‘paved’ shit?

                  Most roads in Cali are concrete cheese graters, except for stretches of THE 405 that are open sores in the earth…

                2. Which main street? Every town in California has the same street names after oranges. Velencia and shit like that.

              3. That’s a Southern California deal. We don’t say “the” in front of numbered highways in Northern California.

                It’s the easiest way to tell if someone is from LA or SF.

              4. Western New York has that in common with California.

  15. Gas tax increases seem pretty reasonable to me (though the timing is very bad). Assuming that the revenues all have to go to roads (i.e. it is basically a usage fee), and that the tax is a fixed price per gallon, then the tax would need to go up at least enough to keep up with inflation.

    1. Like I said, it depends on which side of the Laffer curve they are on. I suspect the wrong one. They may actualize more revenue by cutting taxes.

      1. California is so far on the wrong side of the curve, they can’t see it anymore.

        That’s why they don’t know which way to go.

        1. Please for the love of god don’t read the RationalWiki article on the Laffer Curve.. At the risk of sounding like a progressive, i’ve always seen the laffer curve as correct.. but imprecise, it is less of a macroeconomic model and applies more to microeconomics. It doesn’t take into account that some areas of the economy are more profitable and may remain profitable even after significant increases in the cost of production, while others supply will dramatically shift to the left in response to increases in costs of production. So say increasing the excise on something which is experiencing a boom in demand and profitability… idunno like weed if it has been recently legalized, will significantly increase revenue, whereas the same for something that has gradually become more elastic and substitutable like fuel, will fuck over everyone, between reduced profitability, reduced revenue and increased cost on consumers. Basically my point is yeah, California is on the wrong side.. but all too often we apply the Laffer Curve to macro economics.

    2. The problem is that given the huge variances in fuel economy between vehicles, the amount of gas you buy has very little relationship to how much you use the roads.

      A co-worker and I bought new cars at about the same time — me a RAV4 V6, him a Prius. I commute between San Jose and Santa Clara on surface streets, getting about 15 mpg; he commutes from Walnut Creek mostly on freeways, getting north of 30 mpg. We’ve both bought about the same amount of gas, and, thus, paid about the same amount of gas taxes, but he uses the roads about twice as much as I do.

      A better form of usage fee than a per-gallon tax on gas would be a per-mile tax on driving. But that would require some government entity to monitor miles driven somehow, which, no.

  16. The state Board of Equalization voted 3-2 on Thursday to increase the excise tax about 10 percent, from 36 cents per gallon to 39.5 cents per gallon.

    “We’ll make everybody equally poor, so say we all!”

  17. I don’t even equate fuel taxes with “user fees”- they are too disconnected from actual use. Fuck excise taxes.

  18. For decades, the anti-auto crowd has said that cars are “unfairly subsidized” by taxes, that the gasoline taxes, bridge tolls, vehicle registration fees and driver license fees do not begin to cover the costs of maintaining, let alone extending the roadway infrastructure. Lets make a deal: Let’s say that the ONLY money that governments can spend on roads must come from the abovementioned or other specially-levied vehicle or fuel taxes, and that those funds may be spent for no other purpose. Let’s also say that, if the road fund hits a particular threshhold without being spent by tax time, any excess is refunded to the people (perhaps by lowering the fuel tax or an income tax credit).

    I am willing to bet that our roads would improve very quickly. Or at least, we would be able to buy a satisfactory infrastructure, without so many potholes. Vehicle owners would be fairly paying as they went. Mass-transit, though, would have to raise fares and scramble for funds. Why don’t we give the idea a try and see what happens?

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