California to Reduce Excise Tax on Gasoline

Drivers are going to catch a break starting on Tuesday due to a new provision set forth by the State Board of Equalization, California's state agency for taxation and fee administration. This provision will lower the California's state excise tax on gasoline from 39 and a half cents per gallon to 36 cents per gallon, a drop of about nine percent.



This drop in the gasoline excise tax stems from a change to the tax formula in 2010, which aimed at including a much larger share of the sales tax in the State. Jerome Horton, the current Chairman of the Board of Equalization, stated that the change is really coming due to the fact that California drivers are buying more gas. After the annual review of the gasoline excise tax last year, the Board of Equalization agreed that the tax needed to be raised in order to bring in a required amount of revenue. Now that the amount of gas being bought is increasing, the tax can be lowered and still bring in enough revenue for the State.



This change is also stemming from increased sales tax revenue within the State. Horton says that this will balance out the bite of the taxes for California consumers. Because they are going to be paying more in sales tax when taking the State as a whole, they will not need to pay as much in the gasoline excise tax.

All of this hype about the gas tax dropping is coming after a year where the excise tax was raised from 36 cents (which is what the tax is being reverted to) to 39 and a half cents. This 3.5 cent hike the amount of excise tax levied was what pushed California to be the most taxed state in the United States when it came to gasoline.



The total gas tax for the State, including the excise tax levied on gasoline itself, is still the highest in the United States at 70 cents per gallon, being followed closely by New York, with just over 68 cents in taxes per gallon, and Connecticut, with just over 67 cents in taxes per gallon. The national average for gasoline tax, including the excise tax, hovers just south of 50 cents per gallon, so even with the subtle drop in the taxes on gas for Californians, the State they live in remains the most taxed in the Nation.