Utility Consumption Tax

FY 2021-23 Proposed Policy Budget

The Utility Consumption Tax (UCT) is imposed on the use of utilities, primarily electricity, natural gas, cable television, and telephone. The UCT applies to both residential and commercial users. It 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 Board of Equalization (BOE) quarterly, and then remitted to the appropriate local taxing jurisdiction less an administrative fee. AB1717 generates approximately $24,000 annually.

In FY 2020-21, UCT revenues are projected to decrease slightly relative to the FY 2019-20 levels because increases in energy usage are expected to be offset by energy efficiency gains; thus, beginning in FY 2021-22 and continuing throughout the forecast period, UCT is projected to continue a gradual decline from its pre-pandemic level.