$7.99 of $40.00 fill-up went to taxes — state profits more than producer or gas station

California has one of the highest fuel taxes per gallon in the United States. Included are the federal $0.184/g excise tax, state $0.180/g excise tax, state $0.020/g underground storage tank (UST) tax, and normal state (8.25%) and district (1.5%) sales tax. Here in Los Angeles, that’s another 9.75% on the per gallon sales price. It is unclear to me whether the sales tax is calculated before or after the excise and UST taxes are added. I’m going to guess that the excise taxes are added after sales taxes, since I’ve never heard of taxes compounding upon each other. You can read more about California Fuel Taxes on this State Board of Equalization web page. You can read more about the state and county/district sales taxes on another State Board of Equalization web page .

That means for my wife’s fill-up tonight, where the per-gallon price was $3.459, the taxed portion was about 69 cents. For a $40 fill-up, that was $7.99 or 20%. I’m going out on a limb and suggesting that the state profited more than anyone else in the supply chain on this transaction, since they have practically no marginal costs associated with collecting it. At least, this simple chart suggests that producers’ net margin is on the order of 10-20% over a long period of time. What do you think?