The LA Daily News reported yesterday that California Assembly Democrats unveiled a transportation spending proposal that would lower the gasoline tax, but raise sales and excise taxes in an effort to immediately fund major projects. The complex proposal involves the state selling $10 billion in bonds to raise money to “jump start” transportation and transit improvements. The tax shift is necessary (supposedly) because of constitutional limitations on the sources of funds to pay back this type of bond. This proposal would
- Exempt gasoline from the state’s 5% sales tax, currently about 11 cents per gallon, or about $1.3 billion total.
- Raise the statewide sales tax by ¼% for five years. It would go back to its current level in 2010 only if Congress allows the current cut in the estate tax to expire that year as planned, bringing in about the equivalent amount of revenue to California.
- Raise the current 18-cent-per-gallon excise tax on gasoline by one cent in 2006-07, two cents in 2010-11 and another one cent in 2015-’16. It also would increase by 3% every five years to account for inflation.
The state would sell $10 billion in bonds to pay for transportation projects, repaying the debt through the increased gasoline excise tax.
Opinion
I think this is a bad idea. As much as I am in favor of improving funding for transportation, it should be paid for by the users of the roads. A gas tax does this; this has been known since the days of Collier-Burns. Moving transportation funding for roads to a sales tax impacts people that don’t use the roads, and has a larger impact on those that can afford it least. It also has a significant impact on commerce and industry in the state. I’m surprised to see a proposal such as this from the Democrats, who are usually against sales taxes.
Bad, bad, idea.
