If you want to know (another) reason politicians don’t really want to step in and take action to lower gas prices, check this out from Associated Press on California’s current budget debate:
The budget adopted by the
state Assembly, 56-23, contained about $103 billion in general fund
spending, $1 billion less than Schwarzenegger proposed in May. It also
reduced the state’s operating deficit from $1.5 billion to about $700
million and provided what lawmakers said would be the state’s
largest-ever reserve in a single year, $3.4 billion.It does so largely by shifting $1.3 billion in unexpectedly
high gasoline tax revenue to help pay for the state’s operating
expenses. Democrats had sought to keep that money in funds for public
transit agencies.
In other words, when the oil companies charge record prices and make record profits, the government gets record revenue. Call it a kickback. As a result, politicians who have long refused to tackle the question of how to honestly and equitably pay for government, are getting bailed out by motorists who are paying ever-steeper gas taxes.
A 2005 study by my colleagues at the Foundation for Taxpayer and Consumer Rights and industry analyst Tim Hamilton explained that California is one of only nine states that maintains a sales tax on top of the standard state and federal excise taxes. But unlike the excise taxes, which are a fixed price per gallon, the sales tax is a percentage of the price per gallon and, therefore, floats with the price. When pump prices rise, the state collects more revenue.
The ’05 study calculated that in the first eight months of that year drivers saw their gas tax increase by 43% as a result of rising prices. With drivers paying $1.3 million more in gas taxes than the state projected this year, it is definitely time to look at capping the sales tax so that the politicians don’t continue to bank on the oil companies jacking up prices…