Newsom offers vehicle owners $400 to offset gas prices

(CN) — Governor Gavin Newsom said California car owners could receive tax rebates of $400 as early as July as part of an $11 billion proposal to address surging gas prices.

The proposed payment has no maximum income cap and would be distributed in the form of a $400 debit card sent to each registered vehicle owner in the state. People who own more than one vehicle would receive a maximum of two payments.

Transit agencies will also receive $750 million in incentive grants to provide free bus, subway, or light rail fare for three months.

Newsom is also calling for $600 million to pay for a one-year pause on the sales tax rate for diesel, and $523 million suspend a planned July inflationary adjustment to the state’s gas tax — a plan he hinted at during his January State of the State address.

“We’re taking immediate action to get money directly into the pockets of Californians who are facing higher gas prices as a direct result of Putin’s invasion of Ukraine,” Newsom said Wednesday. “But this package is also focused on protecting people from volatile gas prices, and advancing clean transportation — providing three months of free public transportation, fast-tracking electric vehicle incentives and charging stations, and new funding for local biking and walking projects.”

Newsom’s office said he will be negotiating the package with lawmakers over the next few days, though the so-called “gas tax holiday” will likely be a sticking point with Democrats. Republicans favor suspending the gas tax, but as the Sacramento Bee reported, an effort to force a vote on freezing the tax for the next six months failed in the Assembly last week.

The independent Legislative Analyst’s Office found that while lower gas taxes would translate to lower prices at the pump, a one-year tax freeze would result in a larger increase in 2023. The average cost of gas in California currently stands at $5.87 per gallon. Drivers pay taxes of around 51 cents per gallon on gasoline and 38.9 cents per gallon on diesel, according to the legislative analyst.

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