Are We Really Going to See a Gas Tax Holiday?

Yuriy K /

A little over a year ago, on the day when President Joe Biden took office, you could get a gallon of gasoline for approximately $2.37.

When you pull up to the pump today, you better expect that to be about two bucks more, a whopping $4.35 which is an all-time high.

This record price is not only because of the Russian invasion of Ukraine and the sanctions that have been imposed. There are a number of factors that have contributed to these soaring prices. The fact is that by the end of February, even before Russia crossed the Ukrainian border, the price of a gallon of gas was $3.59.

President Biden has taken other actions, like limiting oil exploration and regulating current oil production, that have caused the price of gas to rise.

Some people are calling for Biden to release oil from the Strategic Petroleum Reserve (SPR), but that is a bandaid on a massive wound. It would only bring relief for a few weeks or months. Most believe that there are just two ways to bring down the price at the pump: find more American oil or import it from all nations.

But is there another option that could relieve the American people?

There is a new call from governors and other political leaders to suspend both federal and state taxes on gasoline. This idea is gaining momentum and being called a “gas tax holiday.”

ABC News reported, “an increasing number of governors and state lawmakers are calling for the suspension of gas taxes to provide relief to motorists who are facing the prospect of even higher pump prices as the country cuts off Russian oil imports.”

This is being driven by GOP legislative leaders in Michigan and Pennsylvania. They announced proposals this week to suspend or reduce state gas taxes. Before these proposals, both the Republican governor of Georgia and the Democratic governor of California called for the lessening of state gas taxes.

Along with these proposals, six Democratic governors sent a joint letter to congressional leaders challenging them to support legislation that would suspend the federal government’s 18.4-cent-a-gallon gas tax through 2022. Those governors represented the following states: Wisconsin, Pennsylvania, New Mexico, Minnesota, Michigan, and Colorado.

Similar calls for financial relief are coming from leaders on Capitol Hill. There are now bills pending in both the House and the Senate that would create a gas tax holiday. The bills include plans to make up for lost money by using the general fund to pay for state highway and public transit programs.

The problem with these plans, according to some experts, is that they do not guarantee that the savings will actually reach the people of America. According to the American Road & Transportation Builders Association, only about one-third of the value of former gas tax cuts or tax increases were passed on to people buying gas. This is according to a 2020 report that analyzed 113 state gas tax changes over the last two or three years. The reason for this is the complexity with which gas prices are set, according to ABC News.

Jim Tymon, the executive director of the American Association of State Highway and Transportation Officials, said, “The real problem with this approach at both the federal and the state level is that there’s no way to ensure that the people will see this savings when they go to the gas pump to fill up their cars, their SUVs and trucks.”

There has to be someone who can cut through the chaos and get to the core of what really matters. Let’s hope we do not have to wait for fresh GOP blood in the mid-term elections.