California Imposes Big Gas Tax Hike

Published May 22, 2017

Californians will pay more at the fuel pump this fall, after Gov. Jerry Brown (D) signed a gasoline tax hike into law in late April to fund new road construction.

Brown signed Senate Bill 1 on April 28, increasing the state’s excise tax on gasoline to 40 cents per gallon, a 12 cent—or about 43 percent—hike.

The tax increase is expected to raise about $5.2 billion in new annual revenue and is scheduled to take effect on November 1.

Road Funding for Roads

Akash Chougule, a policy director with Americans for Prosperity, says most gas tax revenue is used to build things other than new roads and bridges.

“California would be a lot smarter if they actually used gas taxes to fix roads and bridges,” Chougule said. “In California, the biggest culprit is the high-speed rail. It’s obviously a huge boondoggle: It’s way over cost and way over time. That’s being funded partially by gas tax dollars that are supposed to be fixing roads and bridges in the state.

“You have the gas taxes paying for highway beautification, bike paths and sidewalks, and all this other stuff that is not what the gas tax should be used for,” Chougule said. “Those are local projects which should funded by local dollars.”

Not a Revenue Problem

Chougule says California’s problem is too much spending, not too little tax revenue.

“There’s plenty of money going into the state budget in California,” Chougule said. “Spending is really not the problem. It’s the total lack of priorities and a lack of concern for the well-being of people, let alone who the gas tax hits the hardest. The gas tax increase is very regressive. Lower- and middle-income people are the ones who are hit hardest by it.”

Infinite Wants, Finite Resources

Gabriel Roth, a research fellow at the Independent Institute, says lawmakers always want to spend more taxpayer money, even if they don’t know what they’re going to buy with it.

“The politicians say they want to spend so many millions a year, and there’s no evidence that this is really needed,” Roth said. “Obviously, one knows, to some extent, what is needed for maintenance and operating costs, but when it comes to expanding the road system—building new roads, building truck ways, [and] subsidizing mass transit—really, there are no firm figures for this.

“These are just politicians’ wish lists,” Roth said. “The money they want is always more than the money available.”