Schwarzenegger's no new taxes pledge depends on definition of taxes

Gov. Arnold Schwarzenegger threatened last week to veto a bill that would reduce a corporate tax break, calling it a tax increase. He says requiring to collect tax dollars already owed is a new tax burden.

But he believes a new surcharge on property insurance is a "fee" that Californians ought to pay.

The Republican governor has pledged not to raise taxes in his final year in office, but whether that holds true depends on what your definition of a tax is. Legislative counsel already has drafted the insurance fee as a tax bill.

Since becoming governor, Schwarzenegger has learned that tax promises are situational when it comes to resolving the state budget.

Schwarzenegger spent his first term as an ardent opponent of new taxes. He won the recall election partly on a promise to cut the state's car tax, which he fulfilled his first day in office. Schwarzenegger also won re-election on a no-new-taxes pledge in 2006.

But with the state battered by the recession and facing a $42 billion deficit last winter, Schwarzenegger proposed new taxes on everything from alcohol to veterinary services. He ultimately signed $12.5 billion in temporary tax hikes on income, sales and vehicles, the last of which was the very tax he came to Sacramento to reduce.

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