With the Iran war driving up the average price of gas more than a dollar per gallon, politicians are calling to suspend the gas tax until the crisis ends. A shortsighted tax “holiday” would do little to help drivers while distorting the market at the worst possible time.
While Georgia Gov. Brian Kemp (R) signed a law on Friday to suspend the state’s 33.3 cents per gallon tax for 60 days, other governors have pushed back. In Maryland, Gov. Wes Moore (D) rejected demands by GOP legislators to suspend the gas tax, with his spokesman saying it “would blow a $100 million hole in our transportation budget.” In South Carolina, the state’s Department of Transportation is pushing back on a bipartisan push to stop collecting the tax by saying it would force a pause of planned and ongoing construction projects.
Politicians are right to level with voters. “I don’t know that there’s going to be any simple fix,” Florida Gov. Ron DeSantis (R) said in response to Democrats pushing for a suspension of their 23.5 cent gas tax. “My answer is just get the cost down internationally, and that means having stable energy markets.”
That’s a welcome contrast from four years ago when DeSantis suspended the gas tax in the months before he was up for reelection. Now he’s term-limited, which insulates him from election-year politics.
Gas prices surged in 2022 after Russia’s full-scale invasion of Ukraine. Then-President Joe Biden called for a three-month federal gas tax holiday, but Congress never passed it because most lawmakers recognized it was a gimmick. But Maryland, New York, Georgia and Connecticut also enacted short-term tax holidays back then.
Setting aside politics, pausing the gas tax subsidizes demand during a supply shock. And it deprives governments of revenue they depend on to maintain essential transportation infrastructure. There are better ways to cut taxes and help consumers than this.
The United States is in a stronger position than most of its allies as the world’s biggest oil-producer and a net exporter of energy. This means Americans feel less pain than Europeans and Asians. Nevertheless, a protracted conflict risks pushing the global economy into a recession. That should be a consideration as the White House weighs how long to continue the war.
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