By allowing ads to appear on this site, you support the local businesses who, in turn, support great journalism.
The con artists & their promise of a state and federal gas tax holiday
Dennis Wyatt new mug 2022
Dennis Wyatt

The deceptive words of the flimflam man are being one upped by politicians in Sacramento as well as Washington, D.C.

They are the ones that told us we need a massive state gas tax hike as well as somewhere north of $2 trillion to help the federal government to address crumbling transportation infrastructure needs.

They also told us the current inflation surge is transitory and it is all in our imagination.

But now — in clear fear voters may end their public service careers in November as we are being slammed with the highest inflation rate in more than 40 years — they are eager to make it look like they can feel our collective pain.

In case of those in DC, they want to give a holiday from the 18.4 cent federal gas tax until a month or so after the midterm elections.

That is roughly $26 billion they’re willing to give up.

These are the same people who last year approved a $170 billion transfer into the Federal Highway Fund because the federal gas tax wasn’t generating adequate revenue to meet basic obligations.

They are among the same people who just months ago were gnashing their teeth warning the world as we know it would come to an end if we didn’t fund highway and infrastructure work to the tune of $2 billion plus.

Given it’s the federal government, they won’t let minor details such as not having enough money from a gas tax holiday won’t stop them from proceeding. They’d simply “borrow more” by revving up the printing press.

That way their $26 billion “gift” to drivers for a “holiday” from paying the federal gas tax for 10 months will cost us $40 billion by the time we cover the tab of borrowing to make up for the “holiday” plus the erosion of what dollars spent can due thanks to that “imaginary inflation” that has all of us in a tizzy.

What Gov. Gavin Newsom proposed for California isn’t much better.

On the surface, it looks like a tax cut advocate’s dream.

Newsom wants to suspend the annual gas tax hike that goes into effect on July 1 based on the previous year’s inflation rate. The governor proposes backfilling the $525 million in suspending the gas tax hike that the state would forgo between July 1, 2022 and June 30, 2023 with part of the $46 billion revenue surplus the state is expecting.

The governor’s plan even got some Republicans, best described as borderline hardcore anti-tax fanatics, singing his praises.

But there’s a rather large detail Newsom neglected to mention and those in his new fan base from across the aisle fail to address.

Newsom proposes to suspend and not eliminate this year’s inflation hike that’s built into to the gas tax.

That means when July 1, 2023 rolls around motorists would be slammed with a combined gas tax hike reflecting the combined inflation of 2021 and 2022. Based on current economic trends that would likely be a hike of more than 10 percent hitting motorists at once.

We would be trading pennies in term of absorbing a gas tax hike with more than a nickel at one time given the current rate is 51.4 cents per gallon. Of course, this wouldn’t happen until after the dust settles on the 2022 governor’s race.

There are those among the Democrats on the other side of the aisle that have never come across a tax they don’t like who panned it — not because Newsom’s proposal isn’t much more than a self-serving political rouse. They object to it because it would deprive them of being able to spend $526 million of the surplus Newsom wants to backfill the lost gas tax revenue.

In other words, they want to spend the entire $46 billion in revenue above and beyond what is needed to cover state general fund spending to the tune of $286 billion a year on underwriting new spending initiatives of which they want to be ongoing.

Elected leaders refuse to acknowledge the stark truth that the way California taxes huge jumps in revenue are cyclical given Sacramento is heavily dependent on capital gains taxes.
The reason we have had back-to-back years of record budget surpluses isn’t because the little guy — those making less than $150,000 a year are seeing a massive surge of income as well as spending accordingly — is suddenly in the money.

The top 1 percent of taxpayers are now paying 45 percent of the $332 billion the state will have on hand next year between the budget and surplus.

Most of their new money comes from converting stocks into money.

If the state or federal government tweak their respective gas taxes, they should do it to make it more equitable.

You do that by assessing people for miles driven as well as the weight of their vehicles.

The gas tax, after all, primarily funds road projects.

Vehicles use roads. And the heavier the vehicle the more wear and tear.

How much gas they consume and how their vehicles are powered is irrelevant to the need for roads or at what rate they are work down.

Electric vehicles — and those powered on alternative fuels — escape paying a federal gas tax.

In California it is no longer a 100 percent freebie for electric vehicle owners but close to it.

There is now a use fee the DMV collects annually on the registration of all vehicles that goes to roads.

Electric vehicles escape the gas tax that was imposed as a user fee on those using road. That was before the surge in electric vehicles powered by state and federal tax credits.

The weight of a Tesla S and a BMW 3 are roughly the same. That means each inflicts wear and tear on the pavement virtually the same.

Yet the BMW owner pays gas taxes that cover road upkeep and the Tesla owner doesn’t. It is true the Tesla owner pays the annual DMV fee user fee for roads but so does the BMW owner. And given the value is comparable the fee is the same.

In short, the Tesla’s use of the road is being subsidized.

There is also the question of a motorist that driving 1,000 miles a year versus one driving 10,000 miles annually.

It is why a tax based on miles driven is fair.

It also doesn’t penalize poorer motorists who can only afford older vehicles that get less efficient gas mileage.

A real holiday for taxpayers is to suspend a taxing system riddled with inequities.

But such an idea can’t translate into a sound bite for a re-election campaign.