Economist: Gas Tax Hike To Take Over $1M Out Of LA Economy

LOS ANGELES (CBSLA.com) — Even with gas prices well over $4 per gallon, a new tax ordered by state regulators is set to bring more pain to the pump.

KNX 1070’s Tom Reopelle reports beginning in July, drivers will have to pay an additional three-and-a-half cents on every gallon of gas they buy.

Tax Hike To Push Gas Prices Higher By Summer

The State Board of Equalization approved the excise tax increase with a 3-2 vote on Thursday, pushing the total tax from 36 cents per gallon to 39-and-a-half cents per gallon on July 1.

Regulators are required by law to adjust the excise tax each March.

With California drivers already paying the highest gas prices in the U.S., the increase means the average driver will be paying more than $500 a year in state, federal and sales taxes.

Board of Equalization member George Runner, whose represents Californians from San Bernardino up to the Oregon border, was one of two board members who opposed raising the fuel tax rate.

“I cannot support a more than half a billion dollar tax increase on struggling Californians who are already experiencing significant pain at the pump,” Runner said in a statement.

Revenue from the tax increase is expected to be used to fund highway and mass transit projects statewide, according to Runner.

University of San Diego economist Alan Gin said that could funnel more revenue out of Los Angeles and other Southland cities.

“By my estimate, for every cent that the price of a gallon of gasoline goes up here in San Diego, that takes a million dollars a month out of the local economy,” Gin said. “In Los Angeles, probably more, because the bigger area and there’s more driving.”

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