WASHINGTON — President Trump is considering a cap on state fuel tax that would offer serious relief to California’s long-suffering drivers.
In an exclusive interview with The California Post, the president said his plan could see drivers pay 40% less at the pump.
“Gasoline in California could be $2.50,” he said.
Trump has made his attempts to drive down prices at the pump the centerpiece of his affordability messaging and said he wants to address the fact that the Golden State has the country’s highest gas tax.
The average cost of a gallon of gas in the US in January is $2.83 per gallon, but for California residents, it’s $4.23 a gallon – the second-highest in the nation behind only Hawaii, according to AAA. On Monday, regular gas was $4.99 a gallon at a Mobil in Los Angeles.
“We’ll do that. I would cap it. It’s unfair,” Trump said, without clarifying if he intends to seek legislation or attempt to impose an executive-branch regulation to restrict state taxes.
“You know, [in] Alabama, we have a lot of them that are right around $2, nobody can believe it. We’re drilling like crazy,” Trump said in the Oval Office Friday while bashing the “incompetent” leadership of Democratic Gov. Gavin Newsom.
“California, whenever we reduce it … they just raise their taxes.”
The news will be a welcome relief for Californians like Greg Maness, who was filling up at SoCal Gas Monday in LA.
“To me, it’s always double the rest of the country, which is always depressing and I’m just wondering, where it all goes?” he wondered.
The federal gas tax is 18.4 cents per gallon and states have wide-ranging additional taxes.
California has the country’s highest combined state and federal gas tax at 71 cents per gallon, according to the Tax Foundation — with a state levy of 61.2 cents as of last July, up from 59.6 cents.
How exactly Trump might impose a cap on state taxes is unclear, though there are some obvious options.
Federal legislation is one clear avenue, though narrow Republican control in both chambers of Congress would make a standalone bill difficult, particularly due to the Senate’s usual 60-vote threshold for cloture.
It’s conceivable it could be added to a budget reconciliation package — a once-a-year opportunity to pass policies related to federal spending under special rules that allow a bare majority in the Senate — though doing so would require a parliamentarian finding that it’s germane to spending and revisable under the rules.
Another option would be using the coercive power of the executive branch — potentially though an agency such as the Transportation Department threatening to withhold state funds if gas taxes exceed a certain threshold. Such an attempt likely would face legal challenges — as has been the case over the past year with various withholdings from Democrat-led states.
There is precedent for federal action to compel changes to state laws. For instance, in 1984, Congress passed a law to reduce federal highway funds to states that did not adopt a 21-year-old minimum drinking age. South Dakota, which allowed 19-year-olds to buy alcohol, challenged the law all the way to the Supreme Court – and lost. The state raised its drinking age to 21.
The state gas tax goes up every year on July 1 to adjust for inflation, as required by a 2017 state law to help pay for road repairs.
Voters solidified the annual increases in 2018 when they rejected a referendum to repeal the gas tax increase.
A California Energy Commission explainer on gas reveals that just 37% of the price at the pump is for the crude oil costs. The rest comes from refinery costs, distribution, and various taxes and fees.
Other states have virtually no local gas taxes. The combined federal and state gas tax is just 20 cents in Texas and 25 cents in New York.
Seven states currently have gas prices under $2.50, including Texas, Missouri and Kansas.
Trump scoffed at the notion that California needed the revenue to pay for infrastructure such as highways.
“There is no infrastructure. It’s one of the most incompetent governments. It’s maybe as incompetent as Minnesota, which is saying a lot,” Trump said.
“We’re drilling more oil today than we’ve ever drilled before, and all the other states are taking advantage of it, but California, every time the price goes down, they just raise it, they just get more taxes.”
Trump added: “It’s not the oil, it’s not the gasoline. It just goes down and they — I’ve never seen anything like it — they just raise the price. So it stays the same. So people say, ‘Oh, gee, gasoline is expensive.’ Most people don’t know. It’s a shame.”
