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Why Newsom proposed a gas tax rebate and not a gas tax holiday

Administration officials said a rebate will put the money directly into the pockets of consumers, like the stimulus checks, and kick out the middle man.

SACRAMENTO, Calif. — Rising gas prices are affecting every American but especially Californians, who are paying the most at the pump.

However, money could be headed straight to their wallet under Governor Gavin Newsom's new gas tax rebate he proposed in his State of the State address Tuesday night.

It’s different than the gas tax holiday that other Republican lawmakers proposed. Under the tax rebate, the money will go straight to consumers. Under a gas tax holiday, it’ll be up to middlemen, like gas stations, to lower the costs. 

“That's why – working with legislative leadership – I’ll be submitting a proposal to put money back in Californians pockets to address rising gas prices,” Newsom said Tuesday evening. 

What we know so far about the proposal is that it will cost billions of dollars, Californians have to own a vehicle to qualify and undocumented immigrants also qualify. 

“It'll be spread across people who fit those two criteria," said senior counsel Dee Dee Myers. "And other details to be worked out, but it is a substantial amount of money.”

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But there are still elements that aren't known yet, such as how much per person, if certain professions like Uber or truck drivers will get more than others and how far back these rebates will go.

“It's more complicated, but it's more directly beneficial to people,” Myers said. 

It is more complicated than suspending the 51.1 cent tax per gallon that California passed in 2017, which Republican lawmakers are calling for. 

"There's a lot of programs that get announced by this governor, but not a lot of details," said Assembly Republican Leader James Gallagher. "We have a proposal. We want to suspend the gas tax and save everybody in this state 51 cents a gallon, which would be a much-needed break for consumers."

Myers said that reducing prices at the pump has often ended up in higher profits for oil companies.

University of San Diego Economics Professor Alan Gin said he originally supported the gas tax holiday until Tuesday night. 

“The gas tax holiday is easier to implement. It's not as complicated, but in the case of the gas tax holiday, not all the money would necessarily then go back to the consumers. Again, a lot of it would depend on gas stations implementing that," Gin said. 

Gin said there’s room for fraud, but believes the state learned a lot from their unemployment experience. 

RELATED: California man charged with stealing $1M in COVID benefits

“I think they're going to have some safeguards in there to verify that people have actually made some purchases as far as the gas is concerned,” he said.

Newsom doesn’t submit his revised budget proposal until May, which the legislature then has to approve, so it could be a while before Californians see this money.

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Newsom pitches gas tax relief in his State of the State address | Rynor Report

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