Commentary: Be prepared: New vehicle taxes, fees to take effect


Issue Date: October 25, 2017
By Cynthia Cory
Cynthia Cory
State fuel-tax increases will take effect Nov. 1. A new vehicle fee called the Transportation Improvement Fee will be applied to most vehicle registrations effective Jan. 1.

Starting Nov. 1, the first increase in the state gas tax in 23 years will take effect.

While the Legislature pondered over a lengthy period whether to increase the tax, it was Gov. Brown who crafted the final compromise this past spring and took swift action to secure the vote. Farm Bureau and many other agricultural groups opposed Senate Bill 1, The Road Repair and Accountability Act of 2017, but we were vastly outnumbered by business, labor, city and county government agencies including the California Trucking Association, California Chamber of Commerce, County Supervisors Association of California and the League of California Cities, which strongly supported it.

SB 1 increased fuel taxes and new vehicle fees in order to raise $5.2 billion annually for road and bridge repairs and improvements to mass transit.

On Nov. 1, the base excise tax on gasoline will increase by 12 cents per gallon, bringing it to 30 cents, and the excise tax on diesel fuel will jump 20 cents per gallon to 36 cents. There will also be a 4 percent sales and use tax increase on retail sales of diesel fuel. The partial exemption from sales and use rates on diesel fuel sold under an exemption certificate for qualified farming activities and food processing will remain.

A vehicle fee, to be called the Transportation Improvement Fee or TIF, will start Jan. 1 and will be based on the market value of your vehicle. The TIF does not apply to commercial vehicles over 10,000 pounds, exempt vehicles or historic, collectible vehicles.

The excise fuel taxes and TIF will be adjusted annually, based on the California Consumer Price Index, starting July 1, 2020, to keep pace with inflation, but the 4 percent diesel sales tax will not be subject to the annual CPI adjustment. That means not only is there no end to this excise fuel tax and TIF fee, it will keep getting higher over time.

Annual Fee

Vehicle Market Value

$25

$0- $4,999

$50

$5,000 - $24,999

$100

$25,000 - $34,999

$150

$35,000 - $59,999

$175

$60,000 and up

Though we will see this fuel cost bump in November, there are two efforts underway to repeal the new gas tax and TIF fees. Even if they are successful, their outcome would not be known until late next year.

In June, gubernatorial candidate and Republican Assemblyman Travis Allen of Huntington Beach filed the first initiative to repeal the gas tax increase and other portions of SB 1. Republican party consultants filed a much more succinct measure in September, to require the new gas tax be put to a statewide vote and amend the state Constitution to require voter approval for future such tax increases. The proponents of both potential initiatives have conducted polling and believe the gas tax is "overwhelmingly unpopular."

In response to the repeal effort, a coalition of business and civic groups known as "Fix Our Roads," composed of virtually the same groups that originally supported SB 1, sent a letter in mid-September to California's 14 Republican members of Congress. The letter declared that the state desperately needs to increase spending on its crumbling infrastructure, and basically warned the officeholders that trying to undo the new gas tax could harm Republican re-election chances.

That was swiftly denounced as a "political threat" by a group of 11 Republican members of Congress from California, including House Majority Leader Kevin McCarthy, R-Bakersfield, in a letter saying, "We agree that we need to take significant steps to improve transportation in California; however, we object to the policy contained in SB 1 as well as the process in which it was enacted."

In addition, buried in SB 1 are requirements included in legislation sponsored by the California Trucking Association. Those requirements prohibit the Department of Motor Vehicles, starting in 2020, from registering, renewing or transferring the registration of certain model year diesel trucks over 14,000 GVWR, unless the truck owner can demonstrate full compliance with the California Air Resources Board Truck and Bus Rule.

Farm Bureau continues working for changes to make this less draconian, but it is important for planning purposes to be aware of the current law, in case changes cannot be made.

The good news: If you listened to my frequent reminders the past seven years about signing up for the Agricultural Mileage provision of the Truck and Bus Rule, and you were vigilant about reporting your mileage, you have until 2023 before you can no longer register your truck with DMV. If you are not in the Agricultural Mileage provision, you need to be aware of the following dates:

Effective Date

Model years that cannot be registered with DMV

Jan. 1, 2020

2004 and older

Jan. 1, 2021

2007 and older

Jan. 1, 2023

2010 and older

Ending on a positive thought: In the next several years, with your tax dollars at work, we are supposed to see potholes diminish and road quality improve dramatically.

(Cynthia Cory is director of environmental affairs for the California Farm Bureau Federation. She may be contacted at 916-446-4647.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.