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Republican 'Gas Tax Holiday' bill gutted and moved forward with new tax proposed by Democrats

The bill with the new changes passed the committee.

SACRAMENTO, Calif. — To help with the rising prices of gas, Democratic lawmakers proposed another new solution Monday: taxing gasoline suppliers' profits.

They didn’t, however, write a new bill or a new proposal to do so. Instead, they gutted the Republican 'Gas Tax Holiday' bill and replaced it with the changes. 

Republican Assemblymember Kevin Kiley's bill to immediately suspend the 51.1 cent tax people pay at the pump for 6 months was introduced in January. 

“I knew something was up," Kiley said. "They have refused to hear the bill for months, and they finally, just a few hours before this hearing, suddenly said 'we're going to give it a hearing.' So I was fully expecting some shenanigans.”

Chair of Monday's Transportation Committee, Assemblywoman Laura Friedman, said Kiley's bill highlighted that something needed to be done about gas prices. 

“But nothing in the original bill as proposed says that even a penny of that tax relief gets passed through the pump to individuals," Friedman said. "We leave it up to those big corporations to decide, but now that they know that people will pay $6 a gallon or $5.50 a gallon, there's absolutely nothing that says that they don't just pocket that extra money.”

Democrat Assemblymember Alex Lee proposed erasing everything in Kiley's bill and replacing it with a tax on oil supplier’s profits when the price of gas is abnormally higher than crude oil. 

Kylie said the bill, as amended, is no longer his. 

“I'm offering you the opportunity to be the author of this bill. Would you like to take that opportunity?" Kiley asked Friedman. 

Friedman said, if the bill was moved into the next committee, that she'd "be happy" to put her name on it.

The bill did pass the committee with the new changes by a vote of 8 to 4, down party lines. 

“The idea is to tax the profits and then give it back to taxpayers as a rebate," said UC San Diego Economist Alan Gin. 

Gin said it’s hard to analyze the changes without many details, but he said if a tax is meant to compel companies to lower profit then it would have to be 100%.

“If the tax is less than 100%, then refineries will increase the price of gasoline," he said. "They wouldn't get to keep all of that increase, but they would get to keep some of that.”

Political Reporter Morgan Rynor reached out to Assemblymember Alex Lee's office to request an interview and more information. She asked about how often people would get these rebates? 

His office provided a statement:

"The root of the problem is corporate greed. Plain and simple. The lie that Big Oil is perpetuating is that they don't dictate their own prices – even as they continue to charge the mystery surcharge of 30+ cents per gallon since 2015 and take advantage of global crises to maximize profits when the price of crude oil continues to drop. The Vehicle Fuel Windfall Rebate Fund on fossil fuel corporations would permanently curb their profiteering and return money to Californians when their profit margins exceed $0.30 per gallon."

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