I scanned and inventoried the policies proposed or implemented at the state level according to publicly available information in media outlets and found that bills to suspend gas taxes have been introduced in at least 20 states and bills to provide residents with tax rebates, credits, or stimulus payments have been introduced in at least 16 states. At least three states—California, Connecticut, and Hawaii—are considering policy solutions that offer alternatives to driving.
California’s governor is proposing, among other things, to make public transit free for three months and to make additional investments in pedestrian and biking infrastructure. Connecticut passed a bill that suspends public bus fares for as long as their excise tax on gas is suspended. And Hawaii’s legislators are proposing subsidizing nonmotorized vehicles.
A new report from the Urban Institute catalogs state-level responses and finds that 20 different states have introduced legislation to suspend gas taxes, which are often used to fund infrastructure projects. (Florida, Georgia, and Maryland have already passed gas tax holidays.) There are 16 states considering legislation to provide payments to residents — in the form of tax rebates, credits or stimulus checks — to counteract pain at the pump. Only three are considering changes to help people avoid driving: California, Connecticut, and Hawaii.
“Of the three main categories of policy solutions we could be considering, cutting gas taxes is the worst,” says Jorge González-Hermoso, research associate with the Urban Institute. “It’s very popular, it will get you headlines, but it only creates a simulation that the government is providing a solution.”
González-Hermoso says the problems with gas tax holidays start with the premise that they help consumers. The average gas tax across all states, he reports, is 31 cents a gallon or 7.75 percent of the average price. By one estimate, a driver would have to use 20 gallons of gas a week to save just $30 over the course of Maryland’s one-month holiday. There is no guarantee that station owners wouldn’t pocket the difference, and keep prices roughly the same.
In addition to being ineffective, this policy imperils future infrastructure projects. State and local gas taxes comprise 26 percent of highway spending and often contribute to mass transit as well. They also have the disadvantage of incentivizing driving, as residents in nearby jurisdictions try to take advantage and local consumers know relief is contingent upon buying gas.
Connecticut is already struggling amid an economic downturn. Imposing a significant tax increase simply chops any chance of recovery off at the knees and harms working families with a regressive tax at a time when few can afford it.