Congressman says “Gavin’s Gas Tax” will raise gasoline prices even higher for California residents

Beth Torres

Removing — not adding — taxes on gas will work better, says California State Senator

California Governor Gavin Newsom has proposed monetary penalties on oil companies when they engage in “price gouging.” This comes after last year’s gasoline price hikes that saw California consumers paying some of the highest prices in the nation.

Initially, Newsom proposed a tax on the oil companies for “excessive profits,” otherwise known as a “windfall profits tax.” At a hearing in February, 2023, however, the Governor said: (emphasis added)

“Today’s hearing provided even more evidence that we need to crack down on Big Oil’s price gouging at the pump. Experts detailed how gas price hikes led to record profits and why we need greater transparency. Big Oil’s lobbyists again used scare tactics and refused to provide answers or solutions to last year’s price spikes. We’re taking action to hold them accountable with a price gouging penalty and long-overdue transparency measures.”

Why did a “tax” become a “penalty”? And does it matter?

This CalMatters article from December 2022 offers a concise summary:

“Originally, California Gov. Gavin Newsom called for a tax on excess profits on gasoline sales, but now terms it a penalty, which would make it easier to win legislative approval.”

The article goes on to quote Kevin Slagle, spokesman for the Western States Petroleum Association:

“A fee imposed on the industry as a commodity going to the government, that is going to look and act like a tax. We know windfall taxes have been tried nationally and don’t work. What we need to do is focus on better public policy.”

A penalty is a tax

California Senator Brian Jones (R – Santee) dismisses Governor Newsom’s attempt to substitute the word “penalty” for “tax” as political maneuvering. In the video below, Jones says:

“... Californians know, the legislature knows that if it walks like a duck, swims like a duck, it quacks like a duck, it's a duck. This is a tax. A penalty is a tax.”

For Senator Jones, the crucial point is that any increases in the cost of doing business, including penalties as well as taxes, are likely to be simply passed on to the customers in the form of higher prices.

Bottom line: reduce gasoline prices by $1 per gallon for one year

Senator Jones has introduced legislation that would remove, at least temporarily, an existing tax on gasoline. Rather than impose additional costs on the oil industry, Senator Jones wants to reduce them. 

Jones’ position is simple. He wants to replace Newsom’s proposed increased gasoline production costs, whether they are called a “tax,” a “penalty,” or something else, with a reduction in costs by suspending existing California gasoline taxes. 

As stated on Senator Jones’ Senate website:

“Jones’s Senate Bill 32 and Special Session Senate Billx1 1 suspend the state’s gas taxes and fees to lower gas prices by $1 per gallon for one year.”

By replacing a cost increase with a cost reduction, logic and arithmetic indicate a net reduction in costs. Unlike cost increases, cost reductions at least make lower consumer prices possible.

Senator Jones describes proposed legislation

San Diego news station KUSI 8 interviews Brian Jones.

What do you think about suspending California’s tax on gasoline?

As the above video points out, we are all affected by skyrocketing fuel prices, whether we drive or not. Let me know in the comments if you think Senator Jones’ proposal to reduce these prices is realistic.

Energy prices are one of the topics affecting our personal finances that I write about here on NewsBreak. Be sure to follow me if you would like to see more content like this.

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