Regulators Call It a 'Charge' to Avoid Tax Vote
The fee & tax shell game…
[by Jon Coupal] 2/14/06

More and more, it seems that some of the biggest battles relating to California tax and fiscal policies involve the ongoing debate about the distinction between "fees" and "taxes." As this column pointed out a few weeks ago -- in a piece involving a proposed statewide parcel "fee" on all California land owners -- elected officials often prefer the label of "fee" for their tax hikes solely for the purpose of avoiding certain vote requirements.

Well, paraphrasing Ronald Reagan, here we go again.

There's a proposal in Sacramento that could end up costing you more every time you fill your tank. The Climate Action Initiative is a response from a panel of government regulators to Governor Arnold Schwarzenegger and the Legislature. The regulators have published a draft "Climate Action Report" that they hope to finalize before month's end. (For those who love wading through hundreds of pages of "government speak" to find four paragraphs of substance, you can find it at http://www.climatechange.ca.gov/climate_action_team/reports/index.html).

The purpose of the report is to present strategies to limit greenhouse gas emissions. Although the science behind the "greenhouse" effect and global warming is controversial, what is not surprising is governments' knee jerk response: Let's raise a tax to address this "problem."

But, whatever one thinks of the global warming debate, what cannot be denied is that several California agencies and the business community are already promoting most, if not all, of what the report recommends. For instance, the California Energy Commission, the Public Utilities Commission, and many private companies are currently investing billions of dollars in the development of alternative energy sources such as hybrid vehicles, hydrogen fuel cells, wind-generated electricity, solar power and clean natural gas.

Despite the voluntary actions taken and the progress already made, the Climate Action Report recommends a "public goods charge." That so-called charge would be a 2.5 cent tax on every gallon of gas sold. Annually, it would cost us -- consumers and businesses -- an additional $455 million in gas taxes.

So what's wrong with another gas tax? Let's count the ways. First, in California we pay nearly 60 cents in taxes for every gallon of gas we buy. Second, our state already has the third highest gasoline taxes in the country behind New York and Hawaii. Third, if greenhouse gas emission reduction is good for the public, then why are owners of cars and trucks being singled out to pay for this ostensibly "public" benefit?

But the real rub is that, by characterizing this tax as a "fee," the promoters hope to bypass the constitutional requirement of a two-thirds vote of each house of the California Legislature. Because, in the words of Daniel Webster, "the power to tax is the power to destroy," California voters have rightfully imposed a procedural hurdle on the state's most draconian power.

As the lesson of Proposition 13 taught us nearly three decades ago, higher taxes and an ever-growing government bureaucracy is not something most Californians want. Instead of taxing people out of their homes, this 2006 revival of the same high-tax mentality would be a step toward taxing us out of our cars.

The regulators who are calling for this tax need to understand the process more clearly. First, call this "fee" what it really is: A tax. Second, take your proposal and run it through the Legislature and get the consensus you need for a tax increase.

But we know why this is unlikely to happen. Regulators would first have to justify why, in an era where revenues to the state are higher than ever, a new tax is even necessary. (If global warming is a crisis, let's at least put it higher on the priority list for existing revenue). Moreover, given the fact that significant progress has already been made voluntarily, it is unlikely that the proponents could begin to meet their substantial burden that a new tax is warranted.

We'd like to be able to say that this latest bureaucratic obfuscation between fees and taxes is the last. But California taxpayers know better. CRO

copyright 2006 Howard Jarvis Taxpayers association

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