Some states want to give drivers a gas tax holiday

Until about December, we saw a lot of inflation as people demanded more goods because the economy was recovering from the pandemic and supply chains were tight after December. When Putin started to get more aggressive towards Ukraine, we started to see oil prices go up, gas prices go up and as those prices go up, Americans pay, that’s a separate cause. This is different from what caused inflation before. And what we’ve seen so far is that other oil producers, like Saudi Arabia, aren’t committing to increasing supplies because nobody’s committing to increasing supplies at a moment of enormous geopolitical uncertainty. Markets are trying to price this in and it means everyday Americans are going to pay more at the pump. We are still somewhat dependent on the rest of the world and prices are set by global supply and demand. We are neither protected nor even immune to these forces. We really have the ultimate political conundrum in that President Biden must solve the problem that he did not necessarily cause and over which he has little influence. And yet voters expect him to do just that

Some states want to give drivers a gas tax holiday. But it may not be a wise decision.

As Americans reel from soaring gasoline prices, a growing number of states are looking to give residents a little relief by suspending their gasoline taxes. Almost all states levy taxes or other fees on gasoline sales, in addition to the federal gasoline tax of 18.4 cents a gallon. Revenue is often used to repair and expand transport infrastructure. Nationally, a gallon of regular gasoline costs an average of $4.32 on Thursday, according to AAA. A month ago the price was $3.48 per gallon. Maryland residents may soon be taking a break from the gas station. Republican Gov. Larry Hogan said Thursday that strong revenue estimates and the state’s record surplus will allow him and lawmakers to provide relief by lifting the gasoline tax by about 36 cents a day. gallon. “In this time of global uncertainty, we are working on an emergency gas tax suspension to ease the pain at the pump,” Hogan tweeted. Georgia Gov. Brian Kemp, a Republican, said earlier this week he planned to work with the General Assembly to suspend the state gasoline tax until May 31. The levy is approximately 29 cents per gallon. The aim is to “curb exorbitant gasoline prices,” he said in a statement. of Georgia’s House, said in a statement. In Illinois, Democratic Gov. JB Pritzker told a press conference on Wednesday that the state could provide some relief to residents by easing the pressure of the gasoline tax, which is just over 39 cents per gallon. He has proposed delaying an automatic annual gas tax increase that is scheduled to take place in July. Meanwhile, governors or lawmakers in Arkansas, Maine, Michigan, New York, Pennsylvania and Virginia, among other states, support granting a temporary gasoline holiday or reducing rates. California Governor Gavin Newsom, a Democrat, on Tuesday called for a tax refund to help residents deal with the highest gas prices in the nation. Suspend Federal Gas Tax Also this week, six Democratic governors wrote to congressional leaders urging them to lift the federal gas tax for the remainder of the year. They said they support legislation introduced last month by a bicameral group of Democratic lawmakers that would allow the federal highway trust fund to remain whole by directing the Treasury Department to transfer dollars from the general fund to replace lost gas tax revenue. translates to dollars back in consumers’ pockets for groceries, child care, rent and more,” wrote the governors of Colorado, Michigan, Minnesota, New Mexico, Pennsylvania and Wisconsin. drivers, and it could hurt state budgets and delay road improvements, said Lucy Dadayan, senior research associate at the nonpartisan Fiscal Policy Center. Gas stations won’t necessarily lower their prices if states increase their taxes, she said. Moreover, while most state budgets are sound at the moment, that may change quickly – especially as Ukraine’s conflict and high inflation drag on. Instead, states might want to provide more targeted assistance to low-income residents, who are having a harder time coping with soaring gasoline prices. “It’s much, much more reasonable to give rebates to lower-income taxpayers,” Dadayan said, noting that lifting the gas tax for everyone isn’t fiscally fair. “But eliminating or temporarily suspending gasoline taxes is not prudent fiscal policy.”

As Americans reel from soaring gasoline prices, a growing number of states are looking to give residents a little relief by suspending their gasoline taxes.

Almost all states levy taxes or other fees on gasoline sales, in addition to the federal gasoline tax of 18.4 cents per gallon. Revenues are often used to repair and expand transportation infrastructure.

Gasoline taxes have come under scrutiny as prices soar, fueled in part by Russia’s invasion of Ukraine, which began last month. Nationally, a gallon of regular gasoline costs an average of $4.32 on Thursday, according to AAA. A month ago the price was $3.48 per gallon.

Maryland residents may soon be taking a break from the gas station. Republican Gov. Larry Hogan said Thursday that strong revenue estimates and the state’s record surplus will allow him and lawmakers to ease the gas tax by about 36 cents a gallon.

“In this time of global uncertainty, we are working on an emergency gas tax suspension to help ease the pain at the pump,” tweeted Hogan.

Georgia Gov. Brian Kemp, a Republican, said earlier this week he planned to work with the General Assembly to suspend the state gasoline tax until May 31. The levy is approximately 29 cents per gallon. The aim is to “curb exorbitant gas prices,” he said in a statement.

“In these extraordinary times, every little bit counts, and we remain focused on sustaining our people and our economy,” Republican David Ralston, Speaker of Georgia’s House, said in a statement.

In Illinois, Democratic Gov. JB Pritzker told a press conference on Wednesday that the state could provide some relief to residents by easing the pressure of the gas tax, which is a little more 39 cents per gallon. He has proposed delaying an automatic annual gas tax increase that is scheduled to take place in July.

Meanwhile, governors or lawmakers in Arkansas, Maine, Michigan, New York, Pennsylvania and Virginia, among other states, support granting temporary gas furlough or reduction tariffs. California Governor Gavin Newsom, a Democrat, on Tuesday called for a tax refund to help residents cope with the nation’s highest gas prices.

Suspension of the Federal Gasoline Tax

Also this week, six Democratic governors wrote to congressional leaders urging them to lift the federal gas tax for the remainder of the year. They said they support legislation introduced last month by a bicameral group of Democratic lawmakers that would allow the federal highway trust fund to remain whole by directing the Treasury Department to transfer dollars from the general fund to replace lost gas tax revenue.

“Money saved at the pump translates into dollars in consumers’ pockets for groceries, childcare, rent and more,” wrote the governors of Colorado, Michigan, Minnesota, New Mexico, Pennsylvania and Wisconsin.

Questionable impact

But suspending the state gas tax may not do much to help drivers, and it could hurt state budgets and delay road improvements, Lucy Dadayan said. , senior research associate at the Center for Nonpartisan Tax Policy.

Gas stations won’t necessarily lower their prices if states raise their taxes, she said. Also, while most state budgets are healthy at the moment, that may change quickly, especially as Ukraine’s conflict and high inflation drag on.

Instead, states may want to provide more targeted assistance to low-income residents, who are having a harder time coping with soaring gasoline prices.

“It’s much, much more reasonable to give rebates to lower-income taxpayers,” Dadayan said, noting that lifting the gas tax for everyone isn’t fiscally fair. . “But eliminating or temporarily suspending gasoline taxes is not prudent fiscal policy.”

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