MOORLACH UPDATE — Changing Behaviors — August 4, 2017

As a Certified Public Accountant, I had the privilege of watching how changes in Federal income tax law would modify the behavior of high net worth individuals. But, the middle-class also changes behavior with the times. For example, when interest rates went down to historic lows, homeowners refinanced their mortgages to lower their monthly payments.

When Gov. Pete Wilson raised the bunker fuel tax charged to ocean-going vessels, major shipping companies refueled in the states of Oregon and Washington and California’s fuel tax revenues took a dive (pun intended).

California is now intentionally raising the cost of a gallon of gasoline through higher taxation, thanks to Senate Bill 1 (see see MOORLACH UPDATE — Not Amused — April 17, 2017 april 17, 2017john moorlach) and Cap and Trade (see see MOORLACH UPDATE — Crushing Blow — July 21, 2017 july 21, 2017 john moorlach). What changes in behavior will we see?

With Gov. Brown releasing state prison inmates with Assembly Bill 109, personal property crime has risen (see MOORLACH UPDATE — AB 109 & CalOptima — December 12, 2011 december 12, 2011 john moorlach). And Propositions 47 and 57 have not helped this increase in lawlessness (see MOORLACH UPDATE — Propositions 47 and 57 — December 8, 2016 december 8, 2016 john moorlach).

Following the trend and being logical about it, get ready for an increase in another behavior, siphoning gasoline. The Sacramento Bee presents my editorial submission on this likely premise. I’m just trying to warn you and to save you a little money.

But, that’s not all. The Democrats are also looking at adding a service tax to the mix. Therefore, if you are an attorney and bill a client $500 for services rendered, you may have to bill $600 and remit the $100 service tax of 20 percent, to the State of California.

How will this impact behavior? Well, the country of India just implemented its Goods and Service Tax (GST) approach and its economy has taken a dive in the last few weeks. Just Google it.

BONUS: The summer evening BBQ and Taco Bar fund raiser at the home of Scott and Wendy Baugh on August 10th is almost at full capacity. There are still a few spaces available and I would love to see you there! For more information, contact or go to MOORLACH CAMPAIGN UPDATE — BBQ Invitation — July 22, 2017 july 22, 2017 john moorlach. My thanks to Cox Communications for being our corporate sponsor.



Why you should buy a locking gasoline cap


Special to The Bee

We should anticipate black and gray markets in fuel, now that the Legislature has approved a cap-and-trade gasoline tax increase, estimated by the Legislative Analyst’s Office as much as 73 cents a gallon, plus the 12-cent increase from the gas-tax hike passed earlier this year.

A gray market is legal, but not officially sanctioned. The black market already is here.

“Organized crime gangs are buying hundreds or thousands of gallons of diesel fuel, and reselling them to make an untraceable profit,” NPR reported in 2014. Such crime is prevalent, Glendale police Officer Dan Suttles told the network.

In April 2012, then-Los Angeles Controller Wendy Gruel reported $7 million in missing city gasoline. That led a reader to contact the police about a city gardener, who later was arrested for allegedly selling thousands of dollars of city-owned gasoline on the black market, the Los Angeles Times reported.

One can’t predict how much gas and diesel thefts could rise, but the tax increase coming in November may give an indication of what will happen when the new cap-and trade tax takes effect.

April’s $2 boost to the price of a pack of cigarettes changed behaviors. An LAO report noted that in the two months before the tax increase took effect, tobacco tax revenue ran 24 percent and 37 percent above 2016 levels.

But the extra revenue was quickly snuffed out. The May 2017 cigarette tax revenues dropped 64 percent from May 2016. According to the report, some cigarettes could be coming from states with taxes lower than California’s.

Crime has been getting worse since Jerry Brown was elected governor. The Bee reported, three-quarters of California’s largest cities saw violent crime rise in 2015, with Sacramento’s up 25 percent.

When fuel is contraband, the perpetrator makes a quick profit and pays no cap-and-trade or other taxes of any kind. Before the gasoline tax hike comes on Nov. 1, I would recommend buying a lock for your gas tank.

Sen. John Moorlach, R-Costa Mesa

Sen. John Moorlach, R-Costa Mesa, can be contacted at senator.moorlach.


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