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Josh Owens

Josh Owens

Josh Owens is the Content Director at Oilprice.com. An International Relations and Politics graduate from the University of Edinburgh, Josh specialized in Middle East and…

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Breaking The Gas Tax Could Save Some Pain At The Pump

  • Some states in the U.S. are considering suspending, or have already suspended, taxes on gasoline in an attempt to rein in prices at the pump.
  • Soaring gasoline prices are economically and politically a disaster for the U.S. government, which is why politicians are desperate to drag them down.
  • Some states have made it clear that a suspension of the gas tax is not on the table as the funds are desperately needed for infrastructure projects.

Some states in the U.S. are pausing gas taxes in a bid to rein in prices at the pump, but others are soldiering on without tax relief.

The Michigan Senate, for instance, this week approved a suspension of state gas taxes for six months. The state's governor is expected to veto the bill, however, with one Democratic Senator who opposed the bill saying the tax was necessary for road and bridge repairs.

"We are still impacting the costs that the residents who drive will incur on repairing their tires, replacing their tires, repairing their axles, their suspensions, their alignments – costs that exceed any state motor fuel tax holiday," Ericka Geiss said.

In Arizona, meanwhile, Governor Doug Ducey has signaled that he will not allow a suspension of the gas tax, which comes in at $0.18 per gallon. According to the Arizona Department of Transportation, while a tax suspension could save an average of $103 annually per driver, it would cost the state $540 million annually in lost money for the Highway User Revenue Fund.

"We should be expanding production and not using gimmicks especially when we have infrastructure projects in the state that need resources," Governor Ducey said.

Florida, on the other hand, plans to give its drivers a tax holiday beginning from October. State lawmakers agreed this week to suspend the state gas tax once tourist season is over and the majority of the beneficiaries of the move would be Floridians.

The timing of the suspension prompted criticism, with one Tax Foundation official saying, "People are feeling the pain right now, offering relief in October doesn't necessarily address that. It's a pretty inefficient way to provide relief."

In Georgia, lawmakers are targeting more immediate relief. The Finance Committee at the Georgia Senate voted in favor of a bill that would see the gas tax suspended until the end of May. Since Georgia Governor Brian Kemp is strongly in favor of a gas tax pause, final approval is all but certain.

This is, however, not the case in California, the state with the most expensive gas and the highest gas tax. A Republican proposal for a tax suspension was shot down by Democrats earlier this week. Meanwhile, Governor Gavin Newsom has proposed an alternative way of compensating drivers, with direct rebate checks.

In comments on the failed tax pause bill, the communications director of Newsom's office told ABC that "the Republican's proposal can be manipulated to help line the pockets of petro-dictators and oil companies who are benefiting from the spike in oil prices across the world. The governor has proposed a tax rebate to provide billions in direct relief to Californians who are suffering from rising gas prices across the country, a direct result of [Russia's President Vladimir Putin's] war."

In Connecticut, meanwhile, Governor Ned Lamont and legislators agreed on a gas tax holiday, which would cost the state some $100 million in lost revenue if the legislature approves it.

"Is it enough? No," the Governor said, as quoted by local media. "Inflation is a lot more than the tax cut we're providing." Yet, according to him, the gas tax pause could provide a bridge for drivers to the start of the new fiscal year in the summer, when other tax cuts will come into effect as well.

Oregon, meanwhile, is not even considering a gas tax pause. According to the deputy communications officer of Governor Kate Brown, a gas tax pause will cost the state.

"It is clear that any such suspensions would have state revenue impacts that would need to be addressed through bipartisan action from the Legislature in coordination with our office and state agencies," Charles Boyle told the Oregon Capital Chronicle.

New York, on the other hand, might get some relief from gas taxes. The state Senate has included a proposal for a pause in some gas taxes in the state in its new budget beginning in May and potentially extending until the end of the year.

The gas tax pause issue is a complex one, judging by states' different attitudes to it. All governors appear to be willing to help cushion the blow of high prices at the pump on voter households, yet not all are ready to bear the costs of a gas tax pause.

By Josh Owens for Oilprice.com

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Leave a comment
  • William Wallace on March 17 2022 said:
    WTF are they waiting for!!

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