SACRAMENTO, Calif. – A bill that would slap a windfall profits tax on California oil producers was approved by a state Assembly committee as gasoline prices surged past $3 a gallon.
The bill debated Monday would levy a 2 percent tax on oil company income of more than $10 million and use the revenue to help low- and moderate-income senior citizens pay for prescription drugs.
It was approved by the Revenue and Taxation Committee, 4-3. The vote sent the bill to the Appropriations Committee, the last stop before the full Assembly.
The bill's sponsor, Assemblyman Johan Klehs, a Democrat, accused oil companies of taking advantage of the Gulf Coast devastation caused last year by hurricanes Katrina and Rita.
"The only thing I can think of why prices are going up is pure and simple greed," he said. "The way oil companies can avoid paying this tax is reducing the price of gas at the pump."
Gasoline prices have reached a national average of $2.91 a gallon for self-serve regular and to $3 or more in five states, including California, according to the Lundberg Survey, which checks prices at about 7,000 service stations.
But oil company representatives said the measure could drive up oil and gasoline prices and take away money that could be used for additional oil exploration.
"It's a very capital-intensive business," said Theo Pahos, a lobbyist for the California Independent Petroleum Association. "Any revenues taken are largely reinvested."
Gov. Arnold Schwarzenegger refused to take a position on the proposal when asked about it. He said the only way to cut gas prices was to reduce consumption.
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