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California 3.5-cent gas tax hike kicks in for drivers

The price of gas in Los Angeles is seen Monday, July 1, 2013, the day a 3.5-cent gas tax hike went in effect.
July 1, 2013 12:00:00 AM PDT
Just in time for the Fourth of July, a new hike in the California gas tax is kicking in Monday.

Prices are going up 3.5 cents. California drivers were already paying 36 cents a gallon in state taxes, but the hike means drivers will pay 39.5 cents. Including the other local, state and federal taxes, California drivers will be paying 72 cents in taxes on each gallon alone, making for the highest prices in the nation.

Former California Governor Arnold Schwarzenegger in 2010 signed a Fuel Tax Swap law, which makes certain state gas tax revenues remain the same annually. Since gas consumption has been down over the last couple of years, according to lawmakers, the excise tax has to go up to offset the decrease. Excise tax pays for state transportation and highway improvements.

"Gasoline consumption has been reduced slightly in recent years, in 2011 and 2012 the price of gasoline greatly and unexpectedly outpaced these modest declines in consumption. Higher gasoline prices mean the BOE must adjust the excise tax to make up for the sales tax loss, and achieve the revenue neutrality mandated by the legislation," a Board of Equalization spokesperson said in a statement Monday.

At a Shell gas station at the corner of Fairfax Avenue and Olympic Boulevard, the price of a gallon of regular gasoline was $5.09 Monday morning. That price had not yet been adjusted to reflect the new tax hike.

CORRECTION: An earlier version of this story stated diesel fuel is included in the new gas tax hike; the price of diesel is not affected.


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