With fuel prices soaring, is it time to suspend California’s gas tax?

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It was a bold call when Governor Gavin Newsom in late February suggested a gasoline tax exemption. This kind of decision has been anathema to California governors since the 2003 recall of Democrat Gray Davis in favor of film muscleman Arnold Schwarzenegger.

Schwarzenegger relied on the false claim that Davis added a new gas tax that year, even though he only reinstated a tax he had previously suspended for more than a year. .

It became Schwarzenegger’s key issue during this campaign, and it worked. No one remembered that Davis had saved millions of people hundreds of dollars each over the previous year. All they noticed was that they were paying more at the pump.

Now comes Newsom, who isn’t exactly calling for a tax cut. He recommends indefinitely suspending a 51-cent gas tax increase that is set to take effect this summer. He must know that there will come a time when the state will need this money and he or a subsequent governor will have to let the tax hike take hold.

He knows it could lead to a second recall against him even if his likely re-election this fall goes smoothly.

While Newsom acts oblivious to this possible outcome, Sacramento’s other two top executives are reluctant to give Californians this small relief from inflation.

In a joint appearance before the Sacramento Press Club, State Assembly Speaker Anthony Rendon and State Senate Speaker Toni Atkins expressed doubts.

The two said they believe not charging the new tax, imposed by a years-old law, could cost jobs by cutting funds for transit operations, road maintenance and building construction. highways.

Says Rendon, “I think that’s something that could potentially jeopardize an enormous amount of jobs…it could inhibit economic growth in certain sectors of this state.”

He and Atkins were most concerned about the effects on members of building trades unions, held among key supporters of Democratic legislative campaigns.

But there is no reality to this worry, and they both know it. The approximately $500 million that a one-year gas tax exemption would cost can easily be offset by tapping into California’s current huge budget surplus.

Senate Republican Leader Scott Wilk of Santa Clarita said, “Democrats are deaf if they think people don’t need a break at the pumps.” In fact, gasoline prices in California at the end of February averaged $4.82, the highest in the country. In some places, the posted prices were well above the $5 mark.

Wilk is right. There’s no doubt the state can afford to give drivers — most Californians — a break as it spends billions on the homeless, a very visible but actually tiny part of the population. .

This is especially true now, when some lawmakers are actively considering a proposed new tax on property owned by — not the income of — people with assets valued at more than $50 million.

Even if they don’t produce income, say these uber-liberal Democratic lawmakers, these assets promote the transmission of generational wealth and add value passively but steadily. Affected assets include homes and stocks that pay no dividends but are constantly gaining market value.

The measure is sponsored by Assemblyman Alex Lee of San Jose, which targets California’s more than 15,000 wealthiest people. It would tax anyone with a net worth over $50 million at 1% and apply a 1.5% levy on those with more than $1 billion in net assets.

“We want the obscene ultra-rich to pay their fair share,” Lee told a reporter.

That, he says, would add about $22 billion to revenue for a state that already runs a budget surplus nearly double that amount, with lawmakers unsure what to do with all the cash at hand. The asset tax plan, new except for property tax, would need voter approval to be effective, even in the unlikely event lawmakers pass it.

This is just one example of the type of funding source the state could tap into to replace the gasoline taxes it forgives. Which is just one more reason why it’s a good idea to give everyday people a break right now at a highly visible place, the gas pump.

Email Thomas Elias at [email protected]

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