California passes controversial diesel, gasoline tax hikes

Updated Apr 12, 2017

Gas Pump Filling Up CarCalifornia legislators last week passed a bill to increase the excise tax on diesel fuel by 20 cents per gallon to help fund a $52 billion infrastructure plan, according to a report by Reuters.

The increase in the tax rate will bring the state’s excise tax on diesel fuel from 16 cents to 36 cents per gallon over 10 years. It also increases the state sales tax on diesel from 9 percent to 13 percent. The state’s gasoline tax will also increase from 28 cents to 40 cents per gallon during the same time period.

The average price of a gallon of on-highway diesel across the U.S. is now $2.582. During the last week, prices increased in all regions, with the most significant increase coming in the West Coast less California region, where prices rose 3.7 cents.

The highest fuel prices across the U.S. can be found in California at $2.935 per gallon, followed by the West Coast less California region at $2.772 per gallon. The cheapest fuel can be found in the Gulf Coast region at $2.446 per gallon, followed by the Midwest region at $2.515 per gallon.

Prices in other regions, according to the Department of Energy, are:

  • New England – $2.639
  • Central Atlantic – $2.761
  • Lower Atlantic – $2.516
  • Rocky Mountain – $2.64

The state is expecting to generate a combined $10.8 billion by increasing the diesel excise and state tax rates, along with $24.4 billion from the 12-cent gasoline tax increase. The state will also begin charging an annual vehicle fee between $25 and $175, depending on the value of the vehicle, which is expected to raise $16.3 billion each year.

The new tax rates will go into effect Nov. 1, according to news station KCRA.  The station also reports California Gov. Jerry Brown and legislators agreed to restrict any future greenhouse gas regulations on commercial trucks to help drivers adjust to the new tax rates on diesel, a concession which has drawn sharp criticism from environmentalists.

The state’s Assembly, which needed 54 votes to pass the bill, voted 54-26 to adopt it, while the state’s Senate voted 27-11 to pass it. Brown, who reportedly helped negotiate the plan, is expected to sign it into law this week.

EDITOR’S NOTE: This story was written by Matt Cole and published in TLC’s sister publication, Commercial Carrier Journal,

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