Connecticut may become the last state to approve a gasoline holiday party on Wednesday, as both houses of its legislature voted to suspend the 25-cent-per-gallon tax from April to June. American consumers face the greater pain in the pump seen in years amid uncertainty over the Russian invasion of Ukraine and the country emerging from a global pandemic. Now, state and federal officials are struggling with how to provide assistance.
Gas prices hit an all-time high in mid-March, with the national average of $ 4.33 per gallon of normal unleaded gas and more than $ 5.13 for diesel according to AAA monitoring. Since then, national average gas prices have fallen slightly, but remain high. And some states continue to see average prices exceed $ 5 a gallon.
Even before Russia invaded Ukraine, gas prices rose as demand increased with the easing of pandemic-related restrictions. But the invasion provided an additional shock as countries moved away from Russia – one of the largest oil producers in the world.
At the federal level, the Biden administration earlier this month announced the release of 30 million barrels of crude oil from the Strategic Oil Reserve in a coordinated effort with allies to reduce energy prices across the globe. world. Comes after a similar release of 50 million barrels last fall.
Some members of Congress have also called for the suspension of the federal gasoline tax, which is just over 18 cents per gallon for diesel and 24 cents per gallon for diesel, but was met with bipartisan opposition. and some lawmakers called it a “trick.” “While the Biden administration has left the door open for a gas tax party, some officials have expressed concern about whether companies would actually pass on the relief to consumers.
States have their own taxes and fees on gas. State gas tax and fees averaged 38.69 cents per gallon earlier this year, according to the American Petroleum Institute. Some states have already begun suspending gas taxes to help consumers.
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According to Ulrik Boesen, director of the Tax Foundation’s special tax policy, the suspension of gasoline taxes would provide some relief, but it is not the most tax-efficient improvement.
“We all know how much gas costs around us because we see the big signals and that’s a good goal,” Boesen said. “But it’s more of a good policy than a good policy because you could offer that relief more directly to the people.”
Boesen warns that there are many opportunities for some other entities to take some of the savings before they reach consumers at the pump, so real relief depends on how states approach it.
These are the states that suspend gasoline taxes:
Connecticut
On March 23, state and Senate lawmakers passed a bipartisan bill that suspended the state motor vehicle tax of 25 cents per gallon for retail customers, which has the support from Connecticut Governor Ted Lamont. The temporary measure runs from early April to late June. In mid-March, Lamont said the tax cut could cost about $ 90 million.
Georgia
On March 18, Georgia Gov. Brian Kemp signed a bill to temporarily suspend the state excise tax on motor fuel sales. The state rate is 29.1 cents per gallon for gasoline and 32.6 cents per gallon for diesel. The suspension lasts until May 31, 2022 and applies to gas and diesel, as well as some other forms of engine fuel, such as liquid propane gas.
Maryland
Maryland became the first state to suspend its gas tax on March 18. Emergency legislation suspending the tax for 30 days applies to the 36.1 cents per gallon gasoline tax and 36.85 cents per gallon diesel tax. The move is expected to cost the state $ 100 million.
Other actions of the State
Other states could follow suit to suspend gasoline taxes or pass other measures to help ease the pain at the pump. In Ohio, state Senate Republicans have introduced a bill to temporarily reduce the rate of excise tax on motor fuel for both gas and diesel to 28 cents per gallon for five years. The current state tax is 38.51 cents.
In California, a group of Democratic lawmakers has proposed a plan to use $ 9 billion of the state budget surplus to offer a $ 400 gas bonus to every California taxpayer. It comes after the governor asked for relief to help people struggling with higher costs. A group of California Republican lawmakers had called for the state gas tax to be suspended, but did not get enough support from the assembly to move forward.
In West Virginia, a group of Democratic lawmakers has called on Republican Gov. Jim Justice to convene a special session to suspend the state tax of 35.7 cents per gallon for 30 days.
In Florida, the state legislature included a month-long gasoline tax holiday in the state budget approved in mid-March, but it doesn’t take place until October. Republican Gov. Ron DeSantis has the final say on what he spends.
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- Ukraine
- pandemic
- gas prices
- Inflation
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