Utility Consumption Tax

The Utility Consumption Tax (UCT) is charged on users of given utility, primarily electricity, natural gas, cable television, and telephone. The UCT applies to both residential and commercial users. UCT is collected by utility companies and remitted to the City each month. The tax rate in Oakland has been 7.5% since 1993, although there are two significant exceptions: annual payments by manufacturers are capped at $350,000, and low-income residents pay just 5.5% on energy use (gas and electricity).

Assembly Bill 1717 (AB1717) passed by the legislature in 2014, established the Prepaid Mobile Telephone Services Surcharge Collection and Local Prepaid Mobile Telephone Services Collection Act. AB1717 effectively closed a loophole whereby the sale of prepaid calling cards, cellphones and the like were not subject to the City’s local UCT. The California Department of Tax & Fee Administration (CDTFA) has been charged with establishing a surcharge rate that will be charged on the sales of all prepaid mobile telephone services, collected by the retailer, remitted to the CDTFA quarterly, and then remitted to the appropriate local taxing jurisdiction less an administrative fee. AB1717 generates approximately $18,000 annually.

UCT revenue is projected to net a healthy increase in FY 2022-23 because of the cooler than normal temperatures during the winter months, coupled with the increase in gas and electricity rates charged to the utility users. The gas and electricity rates have since been lower and stabilized. As a result, UTC revenue is expected to grow by approximately $4.70 million, totaling $62.6 million in FY 2022-23 when compared to $57.9 million in FY 2021-22. Thereafter, the estimated UCT revenue for FY 2023-24 and FY 2024-25 is $61.9 million each.