Keystone Today

Historic levels of inflation and soaring gas taxes are leading Democratic governors across the nation to consider suspending their state's federal gas tax in order to take the pressure off U.S. consumers, but analysts warn that this short-term fix could actually make matters worse in the long run.

According to IGEN Blog, the current federal fuel tax rates are .184 cents per gallon for gasoline and .244 cents per gallon for diesel. At .576 cents per gallon, Pennsylvania holds the highest state gas tax in the country.

On March 8, Gov. Tom Wolf announced his support a temporary suspension on the 18.4 cent federal gas tax, according to a news release from the governor's office. However, he is hesitant to suspend the state gas tax.

“Like most Americans, Pennsylvanians are grappling with rising gas prices as they navigate paying for other household needs, from their rent or mortgage to groceries and other necessities,” Wolf said, according to the news release. “A federal gas tax holiday would ease some of that pain on Pennsylvanians’ wallets without impacting important infrastructure projects that are funded through the federal Highway Trust Fund.” 

According to Fox 43 News, on March 9, Senate President Pro Tempore Jake Corman (R-Centre) proposed legislation that would lower the state gas tax through the end of the year by one-third, or about 20 cents per gallon. Corman suggested using federal relief money from the American Rescue Plan Act (ARPA) of 2021 to plug the revenue deficit that would result from the state gas tax cut.

Maya MacGuineas, an opinion contributor for The Hill and president of the bipartisan Committee for a Responsible Federal Budget, emphasized the dangers of a federal gas tax suspension as a quick fix for high pump prices proposed by many Democratic policymakers. Among many risks, she says, a gas tax holiday will amplify the climate crisis and slow the development and adoption of cleaner technologies.

"A gas tax holiday would exacerbate inflationary pressures and slow a needed transition to more energy-efficient and climate-friendly technologies, while cutting off a key source of infrastructure funding" MacGuineas said. "It’s a way for politicians to pretend they are making the situation better, when in fact they are making it worse."

MacGuineas predicts that once the gas tax holiday ends, inflation would be worse. 

"Rather than countering the highest inflation rates seen in decades, suspending the gas tax in an overstimulated economy would boost inflation in 2023, as surging demand coincides with reimposition of the tax," she said. "Remember it was excessive tax cuts and spending that helped get us into this inflation mess. They aren’t going to get us out of it."

The federal gas tax currently helps fund highway and transit spending through the Highway Trust Fund. Ridding the economy of this would defund our infrastructure and worsen our nation’s "already precarious fiscal situation," the op-ed states. MacGuineas says the "Committee for a Responsible Federal Budget estimates that suspending the gas tax through the end of the year would reduce that revenue by roughly $20 billion, nearly halving the trust fund’s revenue for the year."

According to CNET, gas taxes already fail to keep up with rising infrastructure costs, a problem exacerbated by the rising popularity of electric vehicles. Some economists warn that a gas tax holiday will make the problem worse and fail to address issues involving the oil supply.