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California increases Gas Tax by 3.5 Cents Hike to Cover Transportation Projects

California, along with other cash-strapped states, has increased taxes paid for gasoline in an effort to cover shortfalls or pay for transportation projects. Drivers were already paying 36 cents a gallon; with the hike they will now pay 39.5 cents. When you total the other federal, state and local taxes, California drivers will now be taxed a total of 72 cents per gallon. If you drive in California, you will pay the highest tax in the United States of America.

Many drivers downsized  from gas guzzling cars to cars with more efficient gas mileage. That, coupled with high unemployment, caused a decrease in gas consumption over the last couple of years. Lawmakers claimed the excise tax, that pays for state transportation and highway improvements, had to go up to offset the decrease.

“Gasoline consumption has been reduced slightly in recent years. In 2011 and 2012, the price of gasoline greatly and unexpectedly outpaced these modest declines in consumption. Higher gasoline prices mean the Board of Equalization (BOE) must adjust the excise tax to make up for the sales tax loss, and achieve the revenue neutrality mandated by the legislation,” a BOE spokesperson said in a statement Monday.

The cost of an average fill-up will increase by roughly 52 cents, even if the price of fuel goes down.

At least 14 other states — including Maryland, Massachusetts, Minnesota and Wyoming — have either passed similar increases or are considering them, according to the National Conference of State Legislatures.

Still, National Conference of State Legislatures Director Ben Husch said, “Numerous states are now moving to beef up their transportation funding stream, and these states’ bold actions may serve as a model for other states grappling with the same issues.”

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