Newsom Tries to Thread a Political Needle With Problematic Gas Tax Relief Proposal

Newsom's proposal also includes some money for "free public transportation" and active transportation but it is dwarfed by the offer to vehicle owners. And he's still proposing a pause in the scheduled gas tax adjustment.

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Governor Newsom unveiled his proposal to release $11 billion in relief for Californians struggling with high gas prices – and it’s a mess. He’s proposing to give “at least” $400 per registered vehicle to car owners, up to two payments per person. The average driver spends about $300 on gas taxes per year, and delivering this money directly into the pockets of drivers is a politically popular idea.

Except for a few details. For one, Newsom still proposes to suspend the scheduled adjustment on state gas taxes, which would require legislative action, set back revenues for transportation projects – potentially over the long term, depending how a gas tax “pause” is defined – and bring very little benefit to the average driver (the state gas tax is scheduled to go up by about three cents in July).

Newsom’s announcement also highlighted just $750 million in “relief for free public transportation for three months” as well as “$500 million for active transportation.” The first would be in the form of grants to transit agencies to allow them to skip fare collection; the second seems to be a reiteration of what is already in the Governor’s proposed budget, as laid out in January.

Either way, these amounts are dwarfed by what he proposes to give to people who drive, and who keep on driving, despite soaring gas prices and the need for urgent climate action. The governor’s office estimates those $400 payments to drivers could total $9 billion.

In addition, pausing the sales tax on diesel, another proposal, would cost the state $600 million, and pausing the scheduled gas tax adjustment (of about three cents!) would cost California $523 million.

Newsom also does not propose any income cap for people who receive the driver relief money.

Also, what’s with offering people two payments? Who can drive two cars at once? Sure, sure – some families register several cars under one name; but at the same time, there are a lot of people in California who own several cars that they rarely drive – either because they’re antique or barely drivable but kept as backup or any number of other reasons.

But more to the point: why reward anyone for driving?

Everyone is feeling the impact from high gas prices. Even people who don’t drive feel it in terms of higher prices for food and goods and services.

Rolling back gas taxes is a popular idea, but it is still wrong – and harmful to California and the environment – to reward drivers over others. And it’s especially galling that the governor’s announcement includes a lot of verbiage about fighting climate change and “forging an oil-free future” for the state.

It’s malarkey.

Newsom can’t really enact these proposals alone. The legislature still has to agree, and there have been many competing proposals coming from that direction. These proposals are still in flux, but many appear more fair and equitable than what Newsom just laid out. Democratic legislators have proposed rebates that would go to all taxpayers – not just drivers. Some legislators are pushing for an income cap, so that rebates don’t go to the highest income Californians.

Gas tax relief might prove to be too popular an idea to resist, but it runs deeply counter to all of California’s efforts to fight climate change, to promote health, and to foster equity.

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