Hang on for higher oil taxes and higher pump prices
Posted by: Chuck DeVore | 03/11/2008 1:47 PM
This tax increase bill was forced through the Assembly yesterday as a "spot bill" as the 80 Women of the Year were in the chamber being honored. We expect to hear it tomorrow in the Revenue and Taxation Committee, then vote on it tomorrow afternoon.
Stay tuned.
Chuck DeVore
State Assemblyman, 70th District
From the Capitol Weekly a few minutes ago:
Nunez presents new oil tax to boost education funding
Assembly Democrats are moving quickly to force a vote on a bill that would levy new taxes on oil companies to raise money for education.
The bill, AB 3X 9 by Speaker Fabian Nunez was dismissed as a political stunt by Republicans, who say Democrats are more interested in embarrassing Assembly Republicans than actually solving the state's budget problems.
"It's bad political theater masquerading as responsible tax policy," said Assemblyman Chuck DeVore, R-Irvine, the ranking Republican on the Assembly Revenue and Taxation Committee. "It's actually bad fiscal and energy policy."
The bill, AB 3X 9 by Speaker Fabian Nunez was dismissed as a political stunt by Republicans, who say Democrats are more interested in embarrassing Assembly Republicans than actually solving the state's budget problems.
"It's bad political theater masquerading as responsible tax policy," said Assemblyman Chuck DeVore, R-Irvine, the ranking Republican on the Assembly Revenue and Taxation Committee. "It's actually bad fiscal and energy policy."
But for now at least the speaker's office isn't talking. "It is a work in progress," said Nunez spokesman Richard Stapler. "We will likely have more information tomorrow [Wednesday]."
The bill would create a new 2 percent oil tax for any oil company that earns more than $10 million in net income. It would also impose a new 6 percent "oil severance tax" based on the gross value of each barrel of oil produced in the state.
There is no estimate yet for how much revenue the new taxes would generate for the state.
DeVore said the proposal would "devastate oil production in California if it's passed," and would lead to an increase in Calfornia's gas prices, despite language in the bill that specifically prohibits oil companies from passing the cost of the new tax on to consumers.
The bill language was introduced Monday, and is being fast-tracked by the Speaker's office. It is scheduled to be heard in Assembly Revenue and Taxation Wednesday, and on the Assembly floor some time this week, right before the Legislature adjourns for spring break.
According to the bill language, all of the money raised by the bill "shall be deposited in the General Fund and allocated exclusively for the purpose of funding grades K through 14 education."
The timing of this vote is no accident. Gov. Schwarzenegger has proposed 10 percent cuts to education programs in the state. This week, teachers across the state will begin receiving notices that they may not have jobs in the fall.
The governor's press office did not immediately comment on Nunez's proposal.
"This really is a drill," said DeVore. "I wouldn't want to insult the Democrats' intelligence that they actually believe in the policies they've advocated. Clearly, these policies would devastate California's domestic oil production."
Mr. Ayer registered as a Republican to be electable in an interim election with no incumbents. He did...
Hi-ho, hi-ho, it's off to $5 a gallon, we go.
If I recall correctly, CA is the only major oil-producing state without a severance tax. Nevertheless, imposing such a tax will, in the end, result in the shutdown of under- and marginally producing wells.
Considering today's closing price of $108+ per bbl, this tax increase should go down in flames. I can only hope that the Honorable Tom and the other Moderate Rep's can toe the "no new taxes" line on this one.
We may not have a severance tax, but we are one of the only oil producing states with an Ad Valorem tax with essentially levies a property tax on the value of the oil in the ground. Putting a severance tax on top of an Ad Valorem tax may feel good, but it isn't good tax policy.
All the best,
Chuck DeVore
State Assemblyman, 70th District
Honorable Assemblyman ~
Please don't misunderstand my prior statement...I don't think it (a severance tax or any other new oil tax) is a good idea under any scheme. My comment that other states have severance taxes was just an observation.
Tax it in the ground and tax it again upon extraction. Either way you pay--sounds like a liberal tax and spend plan to me.
Standing timber is exempt...there's a severance tax upon harvesting. Do you think Speaker Nunez will compromise by allowing an exemption for oil reserves?
Nah...I didn't think so.
My comment about severance and Ad Valorem taxes wasn't aimed at you Meddlesome Nobody, I just wanted to explain for the rest of our readers that oil already is taxed several times in California: Ad Valorem taxes on the crude, income taxes on the corporate profit for the crude producers, the pipeline owners, the refiners, the shippers, and the retailers, not to mention the drillers and other support companies, sales taxes on the gas and diesel, and excise taxes on the same, payroll taxes on everyone who works in the business too. This list is by no means exhaustive, I'm sure I missed a few...
All the best,
Chuck DeVore
State Assemblyman, 70th District
Chuckie,
that is rich coming from you. If you were not amongst the politicians who fought against the planned El Toro International Airport, we would not have to pay a fortune in fliing our tanks to go catch flights from more distant airports like LAX and Ontario. Even if gas was $1 a gallon, one still puts wear and tear on their vehicles driving to more distant airport locations.
Vernon
Weren't we supposed to get tons of cheap oil from Iraq to help compensate us for our war investment?
Nice try at changing the subject, Dan. So, how is it that making the 40 percent of the oil that California uses and produces in the state more expensive going to help reduce our dependence on foreign oil from places like Venezuela and Saudi Arabia?