New gas tax takes effect Jan. 1

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People are taking advantage of low gas prices to travel by car this holiday season

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SAN DIEGO -- As 2014 comes to an end, so may the downward trend of gas prices. A new gas tax is about to take effect at the start of the New Year and it could add a significant amount at the pump.

“California has second highest gasoline tax in the nation now, before this new tax kicks in,” said Richard Rider of San Diego Tax Fighters. "We’ll be No. 1 easily when new tax kicks in.”

Beginning Jan. 1, what some call a 'hidden tax' will take effect. The new tax could increase the price per gallon by 75 cents, some estimate.

"We've got what amounts to taxes in the form of cap and trade and this applies to industries and now it’s going to apply to cars," Rider said.

The tax comes courtesy of the California Air Resource Board to help cut down greenhouse gas emissions. It’s part of the billion-dollar cap and trade program in which companies buy carbon allowances that they then sell on an open market.

“It’s going change, quite literally, day-to-day because it’s based on the market for the price of polluting,” Rider said.

Those costs will be passed on to consumers in addition to the regular state and sales tax. The average price per gallon of regular gasoline in California is $2.65, down one dollar from a year ago. Experts believe the new increase will start at about 12 cents a gallon, which may not be felt with the current low prices -- but what happens when prices go back up?

“From Sacramento’s standpoint, it couldn’t have worked out better," Rider said. “It just happens that the bottom has fallen out of the petroleum industry.”

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