Republican-led states like Georgia and Maryland have introduced gas tax holidays.
Therefore, President Biden and Democrats in Congress are beginning to push to let market forces drive down fuel costs.
Watching your government that you pay taxes to literally give 14 bil in aid to another country while gas is high here and homelessness has increased shouldn’t sit well with anybody
— 🍟Mcdonalds CoManager (@Effiemagic) March 15, 2022
The Expert’s Analysis
A national gas tax holiday might worsen inflation, per the American Enterprise Institute’s professional tax policy analyst, Kyle Pomerleau.
He told reporters, “They’ll be lowering the tax. Individuals’ post-tax income will rise as a result. This will improve their purchasing power. This will increase the cash pursuing the same items, perhaps driving up costs.”
“What I say will not persuade a single voter. They don’t like $4.10 gas,” Pomerleau said. “There will be significant pressure to decrease gas taxes, but I think it’s a bad idea.”
The White House hasn’t ruled out a federal gas tax holiday, but press secretary Jen Psaki minimized its role in the energy issue earlier this month.
“It’s roughly 18 cents if I’m accurate,” she told reporters of the charge that hasn’t changed since 1993. “Gas has gone up.”
The Bipartisan Policy Center’s VP of strategic priorities and infrastructure policy expert, Michele Nellenbach, doubted a gas tax holiday would help the public, due to high gasoline costs.
Nellenbach concurred with Pomerleau’s inflation fears; although she was less concerned than her AEI colleague. The gas tax currently underfunds the HTF, which protects road and bridge investment.
With minimal short-term reactions, the White House has advocated longer-term consumer behavior adjustments, such as buying electric automobiles.
However, says Nellenbach, not many can afford an EV, and the nation is unprepared for a huge fleet.
This could help a lot of Americans.https://t.co/glMiEEuSFX
— Dinesh D'Souza (@DineshDSouza) March 23, 2022
So, the gas tax is doomed, she says, as we’ll be driving electric cars or at least more fuel-efficient automobiles.
Further Analysis
According to Clifford Winston of the Brookings Institution, Democrats’ subsidizing of fuel might encourage oil companies to keep prices high.
Inflation isn’t the only reason he said a gas tax holiday couldn’t be used to help poorer areas. “The two don’t always mesh,” he noted. “My point is, don’t hope for this to win in politics.”
State gas tax holidays are different because state governments must balance their budgets, says Cato economist Chris Edwards.
“State budget surpluses incentivize politicians to increase expenditure,” he remarked. “A short tax reduction won’t do much for the economy, but it will keep surplus state government funds out of the hands of politicians.”
A Politico/Morning Consult poll released Wednesday finds economists, policy analysts, and the White House disagree with surveys.
Most respondents favored “a temporary exemption” from federal gas taxes. Almost two-thirds encouraged Biden to release additional SPR barrels.
Despite the administration’s claim there are 9,000 authorized, but unused leases that might be utilized, almost 70% of them are backed by increasing domestic production.
Psaki’s deputy, Karine Jean-Pierre, did not brief reporters on the way to Europe for Biden’s Russia discussions with NATO, the G-7, and other European partners.
