Steinberg calls for carbon tax on gasoline

Steinberg calls for carbon tax on gasoline

Last week, state Senate President pro Tem Darrell Steinberg, D-Sacramento, proposed a “carbon tax” on gasoline and other fuels. This tax is separate from the taxes imposed by the state’s cap-and-trade program.

Steinberg has opposed a cap-and-trade emissions tax on gasoline suppliers and consumers similar to what has been enacted — under AB32, the Global Warming Solutions Act of 2006 —  as the state’s cap-and-trade program for other industries. Under that program, the California Air Resources Board has been trading carbon credits for more than a year.

According to KQMD, “Next year for the first time, transportation fuels will come under the program: oil companies will have to account for the emissions from Californians’ cars and trucks. The cost of buying additional pollution permits is one that companies are almost certain to pass along to consumers.”

A cap-and-trade tax limits the amount you can pollute unless you want to buy a permit to pollute over the limit. You then can “trade” your excess permits if you don’t go over the limit.

Instead, Steinberg favors a simpler gasoline tax, which he says would not cost more than what cap and trade would cost consumers. That is, it’s supposed to be a replacement tax. And Steinberg’s gas tax is called a “carbon tax,” which makes it sound more environmentally fashionable and legitimate.

In a statement, the Western States Petroleum Association said:

“Sen. Steinberg deserves credit for his transparent effort to address the the true cost of California’s climate change policies.  By acknowledging that the state’s cap-and-trade regulations for fuels are about to have a significant impact on the cost of fuel for consumers, Sen. Steinberg has proposed a transparent carbon tax as an alternative.”

The statement acknowledges that the current system under AB32 is a tax, even though it wasn’t sold that way to the state’s citizens when the bill was passed by the Legislature in 2006, and signed into law by then-Gov. Arnold Schwarzenegger.

The problem is that it remains speculative how much cap and trade on vehicle fuels will cost consumers. There is also a possibility we might end up with both taxes.

Double taxation

Assuming Steinberg’s “carbon tax” goes into effect, it would be on top of the already hefty California tax of 71.9 cents a gallon, the highest in the nation. Just last summer, the gas tax was boosted by 3.5 cents. But even taxes on supposedly greedy oil companies would just be passed through to consumers as an estimated 12 cents per gallon excise tax. An excise tax is a tax on top of a tax.

Using a figure of 15.9 billion gallons of gasoline consumed in California in 2011, the added 12 cents per gallon would equate to about $1.9 billion in added gas taxes. So the new tax would bring gasoline taxes up to 83.9 cents per gallon. A 10-gallon fill-up at a service station would then cost $8.39 in taxes. 

Where would carbon tax on gasoline be spent?  

By calling the gasoline tax a “carbon tax,” the taxes collected wouldn’t be spent on pouring concrete for highways. Rather, they would be spent on programs to reduce “greenhouse gases.” Steinberg said he wants to spend the new gas taxes to “improve public transportation and provide an income tax rebate to families earning less than $75,000.” Steinberg has not spelled out whether “public transportation improvement” means the High-Speed Rail, but that could happen.

And would Brown support spending a carbon tax to fund High-Speed Rail, a project he keeps promoting?

That’s where the election comes in. In 2010, Brown won the governorship in part on a campaign promise not to enact any new taxes without voter approval. Hence, his $7 billion tax increase in 2012 became law only after voters passed Proposition 30.

Which is why it could be Brown who steps on the brakes for any new taxes this year, including Steinberg’s gas tax proposal. Californians have been cringing at the pump again as gas prices, due to refinery outages, have been soaring back toward $4 a gallon — without Steinberg’s tax increase.

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