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Board of Equalization Approves Fuel Tax Swap Increase

March 1, 2013

The Board of Equalization (BOE) has approved an increase on the excise tax rate on motor vehicle fuel from 36 cents per gallon to 39.5 cents per gallon. The sales and use tax on diesel fuel will remain the same.


In 2010, Gov. Arnold Schwarzenegger signed the gas tax swap which created a complex new structure for calculating taxes on gasoline. The gas tax swap lowered the sales tax but raised the excise tax to create “revenue neutrality” while freeing up more money for the state’s general fund. BOE is required to annually review the excise tax and make necessary adjustments by March 1 every year.

According to BOE's calculation the 3.5 cent increase will generate $500 million statewide. The increase will take effect on July 1 and remain in place until June 30, 2014.

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