Pain at the Pump: State Leaders Consider Suspending Gas Taxes

As the crisis in Ukraine echoes through the energy markets, augmenting the already-increasing gasoline prices exacerbated by the Biden administration’s war on fossil fuels, state legislatures and governors are considering suspending fuel taxes to help minimize disruptions in Americans’ day-to-day lives.

States are looking at different avenues of implementing these suspensions, as well as weighing the impact of when and how long they should be in effect. Maryland state lawmakers, for example, fast-tracked a bill that will suspend its 36 cent per gallon tax for 30 days. Georgia’s legislature, with the support of Gov. Brian Kemp, unanimously passed a gas tax suspension bill that will last through the end of May. Florida lawmakers voted to suspend their tax for the month of October when fewer tourists travel to the Sunshine State.

Despite a growing movement by state legislative leaders to lower the Keystone State’s gas tax, Pennsylvania Gov. Tom Wolf categorically rejected lowering or suspending state and local gas taxes but called on the federal government to pause the 18.3 cent per gallon national gas tax. Wolf’s opposition to state-level reforms is particularly notable because Pennsylvania has the third highest gas taxes in the nation at 58 cents per gallon. Five other governors, Gretchen Whitmer of Michigan, Jared Polis of Colorado, Tim Walz of Minnesota, Michelle Lujan Grisham of New Mexico, and Tony Evers of Wisconsin also signed a letter to congressional leadership requesting a suspension of the federal gas tax until 2023.

When filling up at the gas station, most Americans have no idea how much they’re paying in state taxes, which can range from under 15 cents a gallon in Alaska to nearly 67 cents per gallon in California, where efforts to suspend the gas tax failed earlier this week (Californians are currently paying about $5.80 per gallon).

To help Americans better understand the taxes collected at the pump, the ALEC model Gas Transparency Act offers a solution. The model would require that retail station owners make fuel tax information readily and visibly available to consumer. Section 1 explains, “tax transparency is critical to understanding a citizen’s total tax burden and making sound decisions about energy and transportation policy.” As our team wrote in 2018:

The state of Washington already implemented a version of this model policy. The truth-in-labeling policy unanimously passed as a budget amendment in April 2017. Inspectors from the Washington State Department of Agriculture put sticker labels on pumps that indicate how much consumers pay in federal and state gas taxes during their routine inspections of gas pumps. Utah has a similar policy where officials post gas tax rates on gas pumps.

Although the recent surge in prices can be tied to international instability, the long-term increase in prices correlate with the Biden Administration’s early executive actions against fossil fuel producers. Now, gas prices are starting to level out at some of the highest rates in U.S. history. As state leaders consider gas tax suspensions, an added dose of transparency and meaningful tax reform would be a welcome addition.