A gas tax holiday saves just a few dollars at the pump, but it causes lasting damage to our transportation infrastructure funding streams.
We all are feeling the pain at the pump. Gas prices have reached an all-time high, breaking the previous record set in 2008, reaching a national average of $4.95 as recently as June 23. These prices are putting significant strain on family budgets and cut into business’ bottom lines for those which rely on transporting goods and services throughout the nation.
Solutions must be explored to reduce these costs, but suspending the 18.3 cents-per-gallon federal gas tax – as President Biden, some members of Congress and many Governors are proposing – won’t do much to get us there. In fact, at most, the gas tax holiday would save Americans less than $2 per 10 gallons, but there’s no guarantee any of these savings would make their way to taxpayer wallets. At the state level, research has confirmed that tax rates are just one part of a pricing scheme that also factors in the price of crude oil and other state-specific considerations. An analysis from the American Road and Transportation Builders Association’s Transportation Investment Advocacy Center found that, on average, one-third of an increase or decrease in state gasoline tax rates is passed through to consumers in the retail price on the day the change takes effect, with no significant impact after that time.
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