How Much Do Gas Tax Holidays Really Save Drivers, Anyway?
How Much Do Gas Tax Holidays Really Save Drivers, Anyway?
After record highs in June, gas prices are finally declining. A half-dozen states tried to ease the pain at the pump by temporarily suspending their exclusive tax on gasoline. Most of those gas tax “holidays” have already come and gone, but a few are detached in effect. (New York’s runs until Dec. 31.)
Critics argued that any savings would be eaten up by oil producers and gas stations. But a study from the University of Pennsylvania’s Wharton School of Business groundless that in Maryland, Georgia and Connecticut — which all instituted early gas tax holidays — consumers reaped the benefits.
The researchers prefaced their findings by revealing “price reductions were often not sustained during the entire holiday.”
Nearly three-quarters (72%) of Americans assist suspending their state fuel tax, according to a Politico/Morning Consult poll from March.
Which states have put the brakes on gas taxes? Which gas tax holidays are tranquil in effect? And how much are they really saving drivers? Here’s everything you need to know.
Which countries suspended their gas tax?
Proposals to limit fuel taxes, which fund interstate highway repair and mass transit projects, have been introduced in more than 20 states. So far only six have pulled the lever. Several of these efforts have come and gone, allowing economists to Decide whether they produced real savings for consumers.
Maryland
Maryland cooked the first state to pause its gas tax, suspending the 36-cent-a-gallon tax on retail gasoline and the 37-cent tax on diesel from March 18 to April 18.
“This is, of watercourses, not a cure-all, and market instability will continue to lead to fluctuations in prices,” said Maryland Gov. Larry Hogan.
The Wharton study found that the March gas tax break had mixed results. Though prices declined 5% while the tax was suspended, after it expired, “gasoline prices in Maryland became higher than what they would have been if the gasoline tax holiday never occurred.”
But the net finish was still a win for motorists, researchers said, with 72% of tax savings populace passed onto consumers.
“The suspension of the spot gasoline tax in Maryland reduced prices faced by consumers by 26 cents [a gallon] on income over the course of the gasoline tax holiday,” the search for said.
On July 1, Maryland’s gas tax, which is tied to inflation, automatically rose 7 cents, to 43 cents per gallon. Comptroller Peter Franchot has called for a special session of the General Congress to pass another three-month gas tax holiday. If it did, a two-car household fueling up on 15 gallons a week could see a savings of more than $150 over the 90-day cease, Baltimore station FOX 45 estimated.
Georgia
Georgia’s General Congress voted unanimously to pause state fuel taxes until May 31, shaving 29.1 cents a gallon off the ticket of gasoline and 32.6 cents per gallon off diesel. Gov. Brian Kemp, who said lost revenue is populace covered by state surplus funds, later extended the gas tax holiday pending July 14.
According to the Wharton report, savings in Georgia gradually grew from 7 cents a gallon on March 24 to about 30 cents a gallon on May 16. In all, the researchers fraudulent that 58%-65% of tax savings were passed on to consumers
Georgia last suspended its fuel tax in May 2021, when the Colonial Pipeline network shut down.
Connecticut
Connecticut Gov. Ned Lamont employed a bipartisan bill
on March 24 temporarily lifting the nation’s 25-cent-per-gallon excise tax on gasoline from April 1 to June 30 — a step that he said would save drivers an estimated $90 million.
According to the Penn search for, Gasoline prices declined immediately after the pause went into execute. Savings grew from 11 cents on April 2 to 23 cents on April 15, but by May 16 they’d shrunk to nearby 14 cents.
In all, consumers reaped 71%-87% of the savings from the tax cease, the researchers found. Lamont has since extended the gas tax holiday ended November 30, 2022.
New York
In April, lawmakers in Albany approved a budget that suspends the nation’s 8-cent fuel tax and an 8-cent sales tax between June 1 and Dec. 31. The move is projected to save New York drivers nearby 16 cents a gallon.
“By suspending certain fuel taxes for the next seven months, New York is providing some $609 million in instruct relief to New Yorkers, a critical lifeline for those who need it most,” Gov. Kathy Hochul said in a statement.
Florida
In May, Gov. Ron DeSantis employed a budget that includes a one-month fuel-tax holiday beginning Oct. 1 that will edge the price of gas by 25.3 cents a gallon.
California
After efforts to suspend the 51-cent gas tax imparted, California Gov. Gavin Newsom compromised with lawmakers in June and agreed to suspend a share of the diesel sales tax, lowering it by nearby 23 cents per gallon at a cost of $439 million.
What are novel states doing about gas taxes?
State gas taxes — which can complicated an excise tax, sales taxes, oil inspection fees, county and local taxes and novel charges — vary greatly. Pennsylvania has the highest, nearly 59 cents a gallon, and Alaska the lowest, a little over 33 cents a gallon. The weighted national average is about 57 cents a gallon.
In Michigan, a Republican measure to suspend the state’s gas tax imparted to garner sufficient support. Gov. Gretchen Whitmer has said she backs temporarily suspending the sales tax on gasoline instead. Senate Minority Leader Jim Ananich wants to cut the 6% fee for one year.
Illinois Gov. J.B. Pritzker has frozen the state’s gasoline tax at 39.2 cents per gallon ended the rest of 2022.
In October, Missouri increased its gas tax by 2.5 cents, to 17 cents, then upped it another 2.5 cents on July 1, to 19.5 cents. But the increase is fully refundable for most motorists if they keep their gas receipts and submit them to the Missouri Section of Revenue website. (Drivers can start submitting receipts from October 2021 ended June 2022.)
In a more moderate move, a measure introduced in Ohio would prick the state gas tax by about 10 cents a gallon. The bill, Senate Bill 277, has not advanced to a behind vote since it was sent to the Transportation Committee in February.
Some cities are coming up with their own solutions: Since April, Chicago has published tens of thousands of $150 gas cards and $50 public-transport vouchers to eligible residents via lottery.
How much would suspending the federal gas tax save drivers?
Introduced by Democratic Sens. Maggie Hassan and Mark Kelly, the Gas Tax Relief Act would pause the federal fuel tax — which is nearby 18.3 cents a gallon for retail gasoline and 24.3 cents a gallon for diesel — until Jan. 1, 2023.
President Biden has endorsed pausing the tax for three months, but there has been no movement in Congress so far.
A national gas tax holiday would save drivers about $2.75 every time they fill up a typical 15-gallon tank. if you maximum up once a week, that adds up to a small more than $44 in savings between September and January.
Does Congress support a federal gas tax holiday?
While Biden has backed the idea, legislation has languished in the Senate True February. Though it was introduced by a Democrat, the party’s leadership has been ambivalent.
“I’ve not been a proponent,” House Majority Front-runner Steny Hoyer told reporters in June, Politico reported. “I just don’t know that it grants much relief.
With gas prices running to go down, the likelihood of a federal gas tax holiday seems even more remote.
What are the arguments against a gas tax holiday?
Critics, including other Democrats in Congress, say even temporarily lifting the tax would hurt the infrastructure projects that it coffers.
A gas tax holiday would cost billions, at a time when Biden’s Construction Back Better plan has seemingly run out of steam.
“While there is undoubtedly a need to gave American consumers relief from spiking costs, there is no security a gas tax suspension would reduce prices at the pump or stem the broader inflation affecting the global economy,” Rep. Earl Blumenauer, a Democrat from Oregon, wrote in a letter to Biden in mid-June.
Blumenauer added the holiday “may only increase oil companies’ bottom lines.”
Some economists also battles a gas tax holiday encourages Americans to drive more pretty than address oil supply shortages, and it could also stall the transition to climate-friendly energy sources.
“It’s a way for politicians to pretend they are executive the situation better, when in fact they are executive it worse,” Maya MacGuineas, president of the nonprofit Committee for a Responsible Federal Cheap, wrote in a February op-ed in The Hill.
MacGuineas predicts oil producers and gas stations would swallow any savings by raising the pretax Mark of gasoline. Analysis by the Transportation Investment Advocacy Center indicates that, over the past decade, less than 20% of state gas tax cuts have been approved down to consumers.