Natural Gas Tax Measure Clears Initial Hurdle

By Published On: October 28, 2011

The proponent of a measure that would add a 10 percent sales tax to natural gas produced in California received approval from the Secretary of State to qualify the measure for a statewide ballot. The initiative’s proponent, Philip D. Sales II, must collect roughly 504,700 signatures from registered voters to qualify the petition for the ballot, according to Secretary of State Debra Bowen. The number represents about 5 percent of the total votes cast for governor in the last gubernatorial election. That percentage is the benchmark used by the state to determine a fair sample of the voting electorate. On Oct. 21, Bowen’s office gave Sales 150 days to circulate petitions to qualify the measure for the ballot. The deadline is March 19, 2012. Sales, who’s a Cal Poly Pomona student double majoring in accounting and economics, told Current that the impetus for launching the initiative was the rising cost of tuition. “People who are close to graduating are dropping out because they can’t get the classes they need, they can’t afford to keep going,” he said. “It’s sad.” Sales said he chose to propose an oil and gas levy because oil companies reap high profits and pay low taxes. On Vermont Sen. Bernie Sanders’ list of the top 10 largest corporate tax dodgers, “four out of the 10 were oil companies,” he added. In the paperwork filed with the state Attorney General’s office Aug. 31, Sales wrote that the aim of his measure is to change the state tax code in order to add a 10 percent tax on the value of oil and natural gas extracted in California to supplement current education funding. He calls the proposal the Save California’s Education Act. Forty percent of the additional oil and gas tax revenue would be allocated to kindergarten to 12th grades, while 20 percent would go to community colleges under the proposal. Another 20 percent would go to the California State University system; and 10 percent each would be set aside for the University of California system and for grants to college and vocational school students. Sales also wants to ban companies raising prices to make up for the lost revenue. “The tax imposed … shall not be passed through to consumers by way of higher prices for oil, natural gas, gasoline, diesel, or other oil or gas consumable byproduct,” his proposal reads in part. “The [Board of Equalization] shall monitor and if necessary, investigate any instance where operators have attempted to gouge consumers.” The Education Act would also prohibit the Legislature from reducing existing education-funding levels based on additional revenues raised by the tax, but Sales admitted this provision would be difficult to enforce. “Although maybe they’re obligated to follow the word of the law, I see no way to reprimand the Legislature for not following that,” he said. According to an estimate by the state’s Legislative Analyst and Director of Finance, the 10 percent tax would result in an additional $1 billion in revenue per year. Although signatures can now be collected, it could take up to a year before the public gets to vote on it. If and when Sales submits the signatures to the Secretary of State, Bowen’s office would have until April 7, 2012, to verify that enough signatures were gathered, and until May 18, 2012, to verify their authenticity. Bowen would then have until July 14 to certify the petition as sufficient, thereby qualifying it for the ballot.

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