California car owners could get up to $800 for petrol

Governor Gavin Newsom reveals proposal to ease price at the pump for state residents

California Governor Gavin Newsom released details of a plan that could help ease the burden of soaring fuel costs at the pump. AP

Californians shouldering the nation's highest petrol prices could soon get a tax break, free rides on public transport and up to $800 on debit cards to help pay for fuel under a proposal revealed Wednesday by Democratic Governor Gavin Newsom.

Petrol prices have soared in recent weeks, the result of pandemic-induced inflation and Russia's invasion of Ukraine. State governments across the country have been debating what to do about it, with the most popular choices being slashing fuel taxes or offering rebates to taxpayers.

California's average petrol prices hit a new state record Wednesday at $5.88 per gallon, more than $2 higher than it was a year ago, according to the American Automobile Association. California has the second-highest petrol tax in the country at 51 cents per gallon.

The governor's office says the average California driver spends about $300 per year on gas taxes. Mr Newsom's idea is to give car owners $400 debit cards for up to two vehicles, for a total of $800.

The money would go to everyone who has a car registered with the state — including the uber-rich, people living in the country illegally, and even drivers who own vehicles that don't use gasoline.

For people who don't have cars, Mr Newsom wants the state to pay for their bus or train fare for three months. His proposal would give $750 million to transit and rail agencies. About $1.1 billion would pay to pause scheduled inflationary increases for diesel and fuel taxes this summer, and another $500mn would pay for projects that promote biking and walking.

“This package is also focused on protecting people from volatile gas prices, and advancing clean transportation,” Mr Newsom said.

Rising fuel prices are a tricky policy issue for Mr Newsom, who is trying to wean the state off fossil fuels. He has signed executive orders aimed at banning the sale of new petrol-powered cars in the state by 2035 and halting all oil extraction by 2045. He has proposed a total of $10bn in funding over six years to boost zero-emission vehicle production and build charging stations.

Mr Newsom's plan must be approved by the Legislature, where Democrats dominate both the Assembly and the Senate. Democratic leaders, however, don't like the idea of giving money to rich people. They have been discussing their own rebate proposal, one that would give $200 rebates to every taxpayer and their children with taxable income less than $125,000 for single filers and $250,000 for joint filers. That means a family of five would get $1,000 while a single parent with two children would get $600.

Mr Newsom's plan is similar to a separate proposal floated last week by more moderate Democrats in the state Assembly that would give every taxpayer $400, regardless of income.

The governor's office said Newsom would be willing to negotiate with lawmakers about who can get the money, a process that could take some time to sort out.