California raises gas tax and charges electric car owners $100 per year

May 1, 2017

America's infrastructure is in desperate need of repair, but despite promises made by President Trump back in February, there's been little-to-no movement on the issue in Washington, D.C. Until there is, states will have to take action themselves if they want to fill in their expanding potholes and shore up their crumbling bridges. 

And that's just what California is doing: on Friday, state legislators passed an increase on gas and diesel taxes. And in a nod to the growing electric car market, the new bill also assesses EV owners an annual fee, since they won't be paying taxes at the pump.

What can Californians (and those passing through) expect to pay? The bill includes the following:

  • A 12-cent increase on the gasoline tax, which brings it to $0.30 per gallon. (There's also a variable excise tax of 17 cents per gallon included in the legislation.) 
  • A 20-cent increase on the diesel tax, which brings it to $0.36 per gallon.
  • A $100 annual fee for electric car owners.
  • An increase in registration fees that ranges from $25 to $175, depending on the value of the car being registered.

The gas and diesel taxes kick in this fall, on November 1, 2017. Registration fees go up as of January 1, 2018. The electric car assessment is delayed until 2020 so as not to dissuade consumers from purchasing EVs.

Governor Jerry Brown says that the new taxes and fees should bring in an additional $5.2 billion per year--money that he and the legislators who supported the measure say that the state desperately needs. Estimates suggest that California currently needs $130 billion worth of infrastructure repairs and improvements. 

The majority of California's new tax revenue will be dedicated to upgrading roads, bridges, and other infrastructure elements. The cash is to be split evenly between state and local projects. Roughly $700 million each year will be earmarked for mass transit initiatives. 

A bumpy ride

Tax increases have always been contentious in the U.S, and this bill was no exception. Even in left-leaning California, Governor Brown had to spend considerable political capital (and pork) to win votes for the legislation. Estimates suggest that he and his team doled out roughly $1 billion in side projects to entice key voters.

Tax-averse opponents haven't given up hope that the new law can be undone. Some want to put a repeal measure on the ballot. And at least one group is launching a recall campaign to unseat Democratic state Senator Josh Newman from Orange County in retaliation for his support of the bill.

All of which is to say: if the fight for increased infrastructure funding is this contentious in true-blue California, it may be exponentially tougher for Trump to get his $1 trillion bill passed by the U.S. Congress--especially if it involves new taxes. Stay tuned.

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