4-4-07 by Court
My friend Rose Ann Demoro, who heads the California Nurses Association, reminded me of another reason behind California politicians’ deafening silence over sky-rocketing gasoline prices. It’s not just big campaign contributions from Big Oil, or junkets to the Copacabana. California’s tax coffers grow fat because the state is only one of nine with a percentage sales tax at the pump. As a result, the higher the price of gas, the less of a budget deficit politicians face each year.
Rose Ann’s local gas station owner told her he was sending much bigger checks to the government these days. In the Bay Area, where Rose Ann lives, gas prices are higher than anywhere in the nation. It reminded me of the study FTCR produced in 2005 showing the incentive government officials had to look the other way over high gas prices because of the percentage-based sales tax.
The study concluded that California’s percentage sales tax provides an economic incentive for government officials to promote high prices at the pump because they result in greater tax collection — an estimated $1 billion more in California during 2005 due to the price gouging. We recommended a "windfall profits rebate" be instituted. The idea never did catch on in Sacramento. Oh well, guess those campaign contributions and junkets might have had an impact after-all.