Daily Column – 29th March 2022

As gas prices around the country approach record highs, a few of states are doing something some of your closest friends have never been able to do: pitching in for gas.

Georgia’s 29-cent-per-gallon gas tax will be suspended until the end of May.

Connecticut’s 25-cent-per-gallon gas tax will be suspended until June 30.

The 36.1 cents per gallon tax in Maryland will be postponed until mid-April.

Florida’s 25-cent sales tax will be repealed, but only after the tourist season has ended in October.

The average price of gas in the United States is $4.24 a gallon, up nearly 48 percent from last year—and state and federal taxes account for a significant portion of that cost (which are used to pay for infrastructure projects and highway repair).

It’s a Band-Aid approach.

While drivers are sure to be excited to save a few pennies (or spend them on a hot gas station corn dog), some experts warn that a “gas tax holiday” could do more harm than good.

Given the uncertainty surrounding fuel prices—with the crisis in Ukraine robbing the market of supply, there’s little evidence that they’ll fall any time soon—temporary tax suspensions could result in sticker shock when prices spike by, say, 30 cents after the holiday ends.

A fall in gas costs is also a possibility, which might lead to an increase in demand. With summer approaching and everyone is looking up “how far to beach,” adding extra incentives to drive while petrol supplies are scarce could exacerbate the problem of high gas prices.

Some economists say that if you truly want to aid residents who are struggling, you should forego the gas tax holiday and instead send them cash. A strategy similar to this is being considered in California. Governor Gavin Newsom has proposed sending a $400 debit card to car owners in the state, coupled with three months of free public transportation, to encourage them to park their car in the garage.

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