California Drivers Get 2 Cents Per Gallon Break in Gasoline Taxes

By Jose de la Cruz | Feb 26, 2016 04:40 AM EST

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Good news for California drivers: they will pay 2.2 cents less for one gallon of gasoline beginning in July after a cut on the state excise tax was approved by a split vote of a divided Board of Equalization.

The existing rate is 30 cents per gallon. This amount will be in effect until June 30, but it will be reduced to 27.8 cents per gallon when the new fiscal year begins on July 1.

"Lowering the rate is the right thing to do, and I'm sure Californians will welcome this reduction," said George Runner, board Vice Chairman, in a statement after the vote of 3 to 2 by the agency which approved the price cut.

According to BE Vice Chairman Runner, last year, California drivers have overpaid their gas taxes due to a complicated formula that was designed to bridge a 2010 deficit on the state budget.  This year the board voted in favor of lowering the tax, 3 - 2, to 27.8 cents a gallon. This rate will end by June 30, 2017.

The resultant effect of this oil price cut is the reduced amount of money that will be spent on building roads and creating mass transit programs to the tune of $328 million in 2017. This is the same amount of money that the board estimates the state will be able to collect from the old sales tax.

It pre-emptively cut the gas tax by 6 cents in 2015 to prevent the over-collection due to reduced gas prices, nevertheless, it also collected too much. The current adjustments are designed to guarantee that for a three-year period, motorists will only pay an equal amount in state taxes at the gas station as they would have paid under the old rate.

The price cut made by the Board of Equalization on Tuesday was the third straight year it has lowered the excise tax.

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