Jerry Brown, the Democratic governor of the State of California has signed into law a major tax increase on gasoline in the state. This new tax is sure to make an impact on the pocketbooks of consumers. SB1, as the bill is known was signed into law last Friday and will levy an excise tax of 12 cents a gallon of fuel. Diesel fuel will see an excise tax of 20 cents a gallon.
The bill is designed to make up for the massive shortfall or deficit in California’s road maintenance program. This new tax is estimated to generate up to $59 billion dollars in revenue to be used for rebuilding California bridges and roads that are traversed by thousands of vehicles each day. The excise tax on gasoline won’t address the massive backlog in funding needed for road maintenance alone though. It is estimated that $59 billion is needed to fix, upgrade and maintain state roads. Local roads and highways will need even more. They will need a sum estimated to be around $78 billion dollars. Clearly additional funding will have to come from other sources besides the gasoline tax.
So what is an excise tax? An excise tax is a tax meant to discourage people from using that product or service. The most famous example of an excise tax is on cigarettes and alcohol. Excise taxes can also be levied to help pay for the associated costs of a product such as road maintenance or use. This makes sense in the case of the California gas excise tax since cars running on gasoline will need roads in order to move around safely and effectively.
While it is true that people will feel more pain or expense at the pump, the move really is required. Since the people who fill up on gas are the ones who will use and benefit from the roads, then it makes perfect sense to tax these people while they are buying gasoline. You use the roads, you pay for them and their upkeep. That is a good and responsible way of using the power of taxation to provide public services and ensure safety.
I generally disagree with a lot of the political moves by Governor Jerry Brown but have no problems with this move. California’s roads need repairs and that will require a lot of funding. The smartest and most logical move is to tax the drivers to pay for the roads they use. It might not be popular but it is a responsible and common sense move that should work out well in the end.