San Diego Union-Tribune (Sunday)
IS THE NEWSOM GAS PLAN A GOOD ONE?
ECONOMISTS NO
Indiscriminately distributing rebates to not only gas consumers but all registered California taxpayers is a highly inefficient and inequitable process. The policy using tax dollars to subsidize car registration holders essentially allocates a handout being paid by everyone else. Huge cost controls currently in place make Californians pay the highest gas taxes anywhere in the nation. It would be much more efficient, sensible and appropriate to just suspend the highly regressive additional 51-cent-per-gallon tax.
YES
For consumers and drivers to benefit from a suspension of the gas tax, gas station owners would have to voluntarily cut their prices once the tax is suspended. Competition may lead to them doing so, but there is no guarantee as to how much of the reduced taxes would get back to consumers. Giving every car owner a card not only gets all of the money to consumers, but it also ensures that the money will be spent as opposed to being absorbed into savings.
NO
On so many levels this is a bad idea. California currently has a budget surplus. If the state doesn’t need the money, then permanently cut the tax. But we also must recognize that gas taxes fund transportation infrastructure, battle carbon emissions and check gas-auto usage. Perhaps use the money to accelerate the construction of electric charging stations! Gas prices will eventually go down and this will be seen as a grandstanding gesture.
NO
The plan should be means-tested to exclude high-income earners. Although painful, high gas prices will encourage more carpooling, use of mass transit, and remote work, which will reduce gas consumption as desired by policymakers. The $9 billion price tag for the rebates is costly. The opportunity to buttress California’s “Rainy Day” fund or reserves should be taken. Those reserves will be sorely needed should a recession or stock market decline pummel tax revenues.
EXECUTIVES YES
But first, the funds should only go to gasusing car owners, not electric car owners. The bigger question is this may be an opportunity to test the probability of Californians actually being weaned from their cars onto mass transit. With gas being very expensive and mass transit being free or highly subsidized, will people actually try transit? Stay tuned.
NO
People need relief right now. Similar to the Federal Child Tax Credit, the California Franchise Tax Board could issue a tax refund in advance to each state taxpayer as a credit to the 2022 tax year. This could be an option versus waiting until later in the year for the $400 per registered vehicle proposed by Newsom. Regulations, taxes and fees contribute to California having some of the highest gas prices in the nation; these should also be reduced to help ease pain at the pump.
NO
Mailing $400 debit cards per car incentivizes the wrong behavior. It feels political (everyone loves cash in their pocket) rather than practical. Several global problems (climate change, dictators) are fueled by our dependence on fossil fuels. Use the moment and the money to increase subsidies for electric vehicles and fund alternatives (nuclear, please). If immediate relief is the goal, declare an emergency, make public transportation free, maybe enforce lower profits on gas sales or suspend pump taxes.
YES
Newsom’s plan is logical because the beneficiaries are those impacted by higher gas prices. It would be relatively easy to identify the qualified recipients using DMV records. We need to do something to support the citizens of the state given fuel costs are now higher here than anywhere else in the U.S. But, we have a broader issue that needs addressing: Taxes are also higher here than virtually anywhere else — while the state has surplus revenue.