Jeff Smith 10 a.m., July 29
- Community Blog
- I've Got Issues
Prop 30 hikes gas prices
If you are already struggling to pay at the pump you may want to consider that Prop 30 hikes gas prices for everyone in the state. Proponents including Governor Brown would have you believe that's not the case but it is. link text
The Stop Prop 30 campaign responded to the Yes on Prop 30’s false claim that Prop. 30 would not increase gas prices. This is what they said:
"Dear Station Manager: You may have received a letter from attorneys representing the Yes on 30 campaign committee attacking the veracity of a No on 30 campaign ad, and demanding that you take the ad off the air immediately. The letter states:
“The ad states that Proposition 30 would result in an increased tax on gasoline” and that such a claim is “highly prejudicial because it alleges Proposition 30 will increase gas prices, an extremely sensitive topic to all Californians given the recent spike in the cost of gasoline.”
Based on the Yes on 30 campaign’s newfound concern over the actual impact of the billions in taxes it imposes on consumers, you would think that the initiative would have been drafted more carefully. As indicated below, Proposition 30 will, in fact, result in a tax increase on gasoline. First, Proposition 30 amends the State’s Constitution. The existing sales and use tax is imposed by statute. Proposition 30 adds Section 36(f) to Article XIII of the Constitution and states in part: In addition to the taxes imposed by Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code [i.e. the statutory sales and use tax], for the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers at the rate of 1/4 percent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in the State on or after January 1, 2013 and before January 1, 2017. (Emphasis added.)
Thus, Proposition 30 imposes a new sales and use tax, “in addition” to the existing sales and use tax and places that tax in the State Constitution. Counsel for the Yes on 30 campaign is correct that in 2010 the State Legislature exempted gasoline from the statutorily imposed sales and use tax and his citation to Revenue and Taxation Code section 6357.7 is correct. However, that section states: On and after July 1, 2010, there are exempted from the taxes imposed by this part, the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, motor vehicle fuel, as defined in Section 7326. (Emphasis added.)
Thus, the gasoline exemption applies only to the taxes “imposed by” the statutory sales and use tax law, not the constitutionally imposed tax proposed by Proposition 30. (See People v. Navarro (1972)7 Cal.3d 248, 260 [Wherever statutes conflict with constitutional provisions, the latter must prevail”]; and Delaney v. Superior Court (1990) 50 Cal.3d 785, 800–801, fn. 11 [Constitutions trump statutes that are in conflict.])
Second, even if the statutory exemption enacted in 2010 applied to the new tax imposed by Proposition 30, the effect on consumers would be the same. As counsel for the Yes on 30 campaign concedes: “an independent excise tax is now levied on gasoline.” What he fails to tell you is that the calculation of that excise tax is completely dependent on the current rate of sales tax. Thus, if the sales tax rate increases or decreases, the amount of excise tax is likewise increased or decreased by the State Board of Equalization. This scheme was called the “gas tax swap.” The statute that implements the “gas tax swap” and sets the gas tax rate is Revenue and Taxation Code section 7360, which provides in part:
(b)(2) For the 2011-12 fiscal year and each fiscal year thereafter the board [State Board of Equalization] shall on or before March 1 of the fiscal year immediately preceding the applicable fiscal year, adjust the rate in paragraph (1) [the rate of gas tax] in that matter as to generate an amount of revenue that will equal the amount of revenue loss attributable to the exemption provided in Section 6357.7, based on estimates made by the board, and that rate shall be effective during the state’s next fiscal year.
If Proposition 30 passes, the State Board of Equalization will be required to adjust the current excise tax on gasoline to increase it to reflect the increase in sales tax that would have otherwise applied to gas sales, but for the gas tax swap."