Calls grow across U.S. for “gas tax holiday”

With gas prices At record highs in the U.S. Russian oil.

Proposals for a “gasoline tax bench” to counter inflation had been slowly advancing in Congress and state chapters before Russia invaded Ukrainebut they have gained momentum this week amid rising prices that averaged $ 4.25 a gallon on Wednesday, according to AAA.

Michigan and Pennsylvania Republican lawmakers on Wednesday announced proposals to suspend or reduce state gas taxes. This came after the Republican governor of Georgia and the Democratic governor of California called for a relief from state gasoline taxes on Tuesday, when President Joe Biden ordered a prohibition on Russian oil imports.

Meanwhile, Democratic governors in Colorado, Michigan, Minnesota, New Mexico, Pennsylvania and Wisconsin sent a joint letter to congressional leaders urging them to support legislation that would suspend the 18.4-cent-per-gallon gasoline tax. of the federal government until 2022.

Critics of the proposals say there is no guarantee that the savings will be passed on to consumers and are concerned that the suspension of petrol taxes could hurt the financing of road projects. Still, the shocking prices at the bomb are driving lawmakers to act.

“In recent days, we’ve seen gas prices skyrocket to historic levels,” Pennsylvania Senate Pro Pro Tempore President Jake Corman, a Republican candidate for governor, said in a note seeking co-sponsors for to the legislation. “We need to do everything we can to address this now at the state government level and offer our support to working families.”

Pennsylvania’s 57.6-cent-per-gallon gasoline tax is the highest in the country, just ahead of California. Corman said he is introducing legislation for a reduction of about a third during the rest of the year. The loss of gas tax revenue would be offset by directing $ 500 million in COVID-19 federal relief aid to the state police and issuing $ 650 million in bonds to ensure that infrastructure projects are maintained. funded.

Pending legislation in both the U.S. House and Senate would also offset the loss of revenue by suspending gasoline taxes by transferring an equal amount of dollars from the general fund to accounts that fund public transportation and highway programs. state. Opposition groups called for the financing of roads and bridges. They fear that a tax break will set a poor precedent and become politically difficult to restore, if politicians are seen as supporters of a tax hike when it starts again.

The potential for loss of infrastructure funding has been one of the biggest hurdles for those who want to suspend or reduce gas taxes, but some state officials say they can afford the financial impact. Many states ended their 2021 fiscal years with record cash balances due to an influx of federal aid for the pandemic and a resurgent economy that generated higher-than-expected sales revenues and taxes.

Suspending Michigan’s 27.2-cent-per-gallon fuel tax for the remaining six months of the state fiscal year would cost about $ 750 million, Republican lawmakers said.

“Michigan has billions of dollars in surplus revenue available,” House Speaker Jason Wentworth said Wednesday. “The solution here is not complicated. Republicans will take action today and put a real plan on the governor’s desk to really reduce the cost of the bomb.”

Would drivers see any savings?

While average gas prices are at record levels, they are still not the highest Americans have paid when adjusting for inflation. The previous record high of $ 4.10 a gallon in July 2008 would be about $ 5.24 in current dollars.

Proposals to suspend gasoline taxes are based on the assumption that the savings will be passed on to consumers.

“The money saved on the bomb translates into dollars in the pockets of consumers for groceries, daycare, rent and more,” the six Democratic governors wrote in their letter Tuesday to Democratic and Republican congressional leaders.

But transport advocates say that due to other factors affecting gas prices, the full amount of tax cuts may not be reflected in the bomb.

On average, only about a third of the value of previous tax cuts or increases was passed on to consumers, according to a 2020 report by the American Association of Road and Transportation Builders that analyzed 113 state tax changes. of gas enacted for several years. This is because retail gas prices are influenced by complex factors, such as the price of crude oil and supply and demand pressures.

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

Last year, Georgia Gov. Brian Kemp suspended state fuel taxes for several days to offset rising prices after a hacking cracked down on a key gas pipeline carrying fuel to much of Georgia.

Kemp said on Tuesday that he wants to re-suspend the state’s 29.1-cent-per-gallon gasoline tax due to rising prices, although details remain to be resolved in legislation introduced in the state. General Assembly.

More than $ 7 a gallon in LA

California Gov. Gavin Newsom also renewed a call to ease rising gas prices during his State of the Union address on Tuesday, after a previous proposal had little force in the Democratic-led legislature. . The average price of a gallon of gasoline in California on Wednesday reached $ 5.57, the highest nationally, according to the AAA, and prices above $ 7 a gallon can be seen at gas stations in Los Angeles. Angeles.

Following Newsom’s speech, California Senate Speaker Pro Tem Toni Atkins and Assembly Speaker Anthony Rendon issued a joint statement saying they plan to get a tax relief from the general fund instead of “a small cut in gasoline taxes that may not go to consumers.” “

Virginia lawmakers were also negotiating this week to suspend a recent gasoline tax hike for a year. The proposal was a key campaign commitment by Gov. Glenn Youngkin, a Republican elected last November. The Republican-controlled House included the temporary 5-cent gasoline tax cut in its budget proposal, but the Democratic-controlled Senate did not.

Prior to Russia’s invasion of Ukraine, Republican Gov. Ron DeSantis of Florida had proposed a five-month break in the state’s gas tax this summer as part of a broader package of tax breaks. . Democratic Gov. JB Pritzker of Illinois had also proposed stopping an automatic 2.2-cent increase in the state fuel tax as part of a broader tax cut plan.

Legislators in other states, including Maryland, Minnesota, New York and Ohio, have also proposed suspending or lowering gasoline taxes. A day after Russia invaded Ukraine, Republican Missouri MP Andrew Schwadron introduced a law to suspend state fuel taxes for six months, citing an emergency to protect consumers from rising taxes. prices.

“The fastest way we could offer this relief would be to temporarily suspend the gas tax,” he said.