Effective July 1, 2013, the excise tax on gasoline in California will increase 3.5 cents per gallon following a vote Feb. 28, 2013 by the California State Board of Equalization (BOE).
The BOE said it is sensitive to the financial impact drivers are feeling at the pump, but state law requires the BOE to adjust the excise tax rate by March 1 of each year in order to ensure revenue neutrality.
As gasoline prices increase, the relative amount of state sales tax that would be collected decreases (save for the fuel tax swap) and itmust be offset by an increase in the excise tax rate, according to the BOE.
In 2010, Gov. Arnold Schwarzenegger signed Assembly Bill x8 6, Ch. 11, and Senate Bill 70, Ch. 9. These bills lowered the sales and use tax rate on gasoline and increased the excise tax rate on July 1, 2010. The laws require the annual sales and excise taxes paid on gasoline to remain revenue neutral. They also mandated the BOE to adjust the excise tax rate by March 1 of each year in order to ensure revenue neutrality.