Gas Tax Rebate Push in California Gains Bipartisan Support

A group of 21 California Assembly Democrats has gained support from Republicans in a plan to offset rising gas prices by giving a $400 tax rebate to each individual California taxpayer regardless of income or car ownership.

The lawmakers said Thursday they are asking Democratic Gov. Gavin Newsom and Senate leaders to act quickly to bring relief to California consumers, who are paying an average of $5.79 per gallon, the highest among the 50 states and far above the national average of $4.29, according to the American Automobile Association. A multibillion-dollar budget surplus has paved the way for broad tax rebates.

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“Given our historic budget surplus, the Legislature must take action now to provide immediate relief to all of our residents,” Assemblywoman Blanca Rubio said at a news conference announcing the rebate proposal.

The rebate proposal is a counter to Newsom’s proposal to suspend an annual inflation adjustment to the state gas tax and offer a tax credit to car owners, and to Republican lawmakers who want to suspend the 51-cent-per-gallon excise tax completely for six months. Democrats who control the Assembly refused Monday to take up the bill on the floor to suspend the tax at the request of author Assemblyman Kevin Kiley (R).

Republicans calling for the tax suspension, however, said they would vote for the rebate as well and said it should happen immediately.

“If they’re going to do a rebate, then let’s do it next week,” Assembly Republican Leader James Gallagher told reporters. “How long is it going to take for them to provide people their taxpayer dollars back at a time when they especially need it?”

The Assembly members said they are negotiating with Newsom and Senate leaders, and they expect to take action in the next few months. Senate President Pro Tempore Toni Atkins and Assembly Speaker Anthony Rendon said last week they will announce details of broader tax relief plans soon.

Nearly 18 million California personal income tax returns were filed in 2019, the most recent year of data according to the Franchise Tax Board. The Assembly group said their proposal would cost about $9 billion, putting a dent in the multibillion-dollar surplus and helping to stay under a constitutional spending limit set in the 1970s.

Drawing money for the tax rebates from the general fund, rather than suspending the gas tax entirely, would keeps gas tax revenue flowing for transportation projects as intended, the Democrats said. And if they opt to suspend the excise tax levied on suppliers, the lawmakers said they have no guarantee the oil companies will pass savings on to consumers.