State Democrats seize Political Ground on Gas Tax Cut

Sacramento Democrats are looking to score political points by reducing the State's gas tax. SacBee writer Dan Walters does not approve.

Democrats believe that they can do the sales tax shift with "revenue-neutral" legislation that would require just a simple majority vote, thus bypassing the constitutional requirement for a two-thirds vote on tax increases. By eliminating a need for Republican votes, Democrats could, they believe, enact a bill that cuts pump prices for gasoline by about $2 per fill-up and dare Schwarzenegger to veto it and thus alienate motorists as popular hysteria about gas prices intensifies.

Ultimately, of course, there is no free lunch. If transportation spending is to be increased by $60 billion - a mere fraction of the true need, incidentally - it will be coming from higher taxes, mostly fuel taxes. The promise of a cut in the pump price, then, is something of an illusion - not unlike what the Legislature did in 1996 by passing its ill-starred and misnamed "deregulation" of electric power. To make it palatable to the public, the Legislature cut utility rates immediately by issuing bonds that were then repaid through surcharges on future utility bills.

There is also an intriguing socioeconomic aspect. The chief beneficiaries of eliminating sales taxes on gasoline would be those who drive gas-guzzling vehicles, such as Schwarzenegger's Hummer. But raising general sales taxes would have its greatest impact on the poor, who spend relatively more of their incomes on taxable goods, and are less likely to drive - an interesting posture for those who profess to protect those on the bottom rungs of the economic ladder.

The plan is also bad for the environment, as blogger Boi from Troi notes, "Democrats should be happy that gas prices are so high and ought to consider raising them further, if anything. Market forces are driving ths shift to hybrid and hydrogen vehicles and away from SUVs. Lowering the gas tax will reverse the gains made for the environment by market forces (which, many Sacramento Democrats likely refuse to believe exist)."