States consider gas tax exemptions to ease pain at the pump
Governors or state legislatures in nearly half the country are seeking to suspend their gasoline taxes to provide some relief to their residents from soaring prices at the pump.
According to the National Conference of State Legislatures, elected leaders in at least 21 states have proposed, are considering, or have adopted some variant of a gasoline tax holiday.
The average cost of regular unleaded gasoline hit $4.33 a gallon on Friday, a record high, according to the AAA auto club. That’s an increase of nearly 50 cents from a week ago, 85 cents from a month ago, and $1.50 from a year ago. The spike is caused by inflation, Russia’s war on Ukraine and the resulting US ban on Russian energy imports.
While the relief may be minimal — state gasoline taxes range from less than 10 cents a gallon to nearly 60 cents a gallon — the politicians’ argument is that something is better than nothing.
And since many states are sitting on large budget surpluses after receiving an influx of federal funds to fight COVID-19, they say they can take revenue hit by lost taxes.
Florida lawmakers have agreed to suspend its 27-cent-per-gallon gasoline tax, but not until October. Democratic Gov. Gavin Newsom, whose state of California has the highest gas prices at $5.72 a gallon and a tax of about 53 cents a gallon, has called for a tax refund. Maryland Gov. Larry Hogan, a Republican, and the state’s Democratic General Assembly leaders agreed to suspend the state’s gasoline tax of about 37 cents per gallon for 30 days.
A gas tax holiday proposed by the GOP that would last six months is expected to pass the Michigan legislature next week. The state gasoline tax is approximately 27 cents per gallon. However, Governor Gretchen Whitmer, a Democrat, signaled she would veto the measure despite Congress’ call for a federal gasoline tax exemption.
The 21 states that have considered or approved relief measures include Arkansas, California, Colorado, Idaho, Illinois, Indiana, Florida, Georgia, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New York, Ohio, Pennsylvania, Rhode Island and Tennessee. , Virginia and Washington.
The federal gasoline tax is 18.4 cents a gallon, but many members of Congress have said waiving it is out of the question, at least for now. Some Democrats are interested, but broad support is lacking.
In fact, suspending the federal tax appears to have more bipartisan opposition than support, as it would blow an estimated $20 billion hole in the federal Highway Trust Fund, which supports transportation projects. Democratic supporters of a federal gas tax exemption have suggested that the Treasury Department’s general fund could prevent such a budget shortfall, an idea that failed to convince their congressional colleagues.
“I think the gas tax exemption is a gimmick put forward by Democratic senators who are up for re-election,” said Sen. Dan Sullivan, a Republican who represents the energy-dependent state of Alaska.
One of the concerns of elected leaders, mostly Democrats, about gas tax exemptions is that the relief will not be passed on to the consumer, but rather line the pockets of intermediaries, such as gas stations. .
Among Democrats, the idea is “certainly being discussed aggressively,” said Sen. Gary Peters, a Democrat from Michigan and chairman of the Senate Democrats’ campaign arm.
“I think it’s a moral – it helps workers who are really struggling with their budgets, makes them feel like the government understands them and they’re trying to do something,” he said. Senator John Hickenlooper, Democrat of Colorado.