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Gasoline excise tax to increase by 3.5 cents

By Jaime Garza

SACRAMENTO, Calif. -- Effective July 1, 2013, the excise tax on gasoline will increase by 3.5 cents to 39.5 cents per gallon and the excise tax on diesel fuel will remain unchanged at 10 cents per gallon, following a vote February 28, 2013 by the California State Board of Equalization (BOE) which executed its legislative mandate to adjust the rate by March 1, 2013.

Although excise tax in not paid directly by the consumer, the gas station owner may choose to pass this tax onto the customer in the form of higher gas prices. While the excise on gasoline will go up by 3.5 cents, the BOE cannot predict what the selling price of gasoline will be on July 1, 2013.

In 2010, Governor Arnold Schwarzenegger signed Assembly Bill x8 6, Ch. 11, and Senate Bill 70, Ch. 9. These bills lowered the sales and use tax rate on gasoline and increased the excise tax rate on July 1, 2010. The laws require the annual sales and excise taxes paid on gasoline to remain revenue neutral. They also mandated the BOE to adjust the excise tax rate by March 1 of each year in order to ensure revenue neutrality.

"The legislature mandated that we equalize the sales and excise taxes to avoid a net increase in taxes," said BOE Chairman Jerome E. Horton. “We could protest the legislation and not make the rate adjustment; however, we would be violating law and arguably exposing taxpayers to even higher taxes in the future."

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