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Editorial

Penny wise and pound foolish: Suspending the gas tax may sound good, but it’s a bad idea | COMMENTARY

In a rare display of like-minded thinking across the aisle, politicians on both the left and right are calling for cuts or suspensions to their state’s gas tax or the federal government’s. It’s happening in California, Colorado, Florida, Georgia, Michigan, Minnesota, New Mexico, New York, Ohio, Pennsylvania, Virginia, Wisconsin and right here in Maryland. In fact, this week our state is set to become among the first in the country to officially pause collection of its gas tax for 30 days in the wake of rising prices at the pump.

The move, which comes as average gas prices in the state have jumped 75 cents in the past month to $4.25 for a gallon of regular ($1.42 in the past year), will save Marylanders roughly 36 cents per gallon of gas. That’s $4.32 on a 12-gallon fill-up. If you multiply that by the average number of miles driven pre-pandemic (which we’re not back up to, by the way), factoring in the average fuel economy, it works out to a little over $21 a month.

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That’s not exactly life-changing for most of us — especially when you consider that only about a third of any gas tax increase or decrease, which amounts to $7.13 amonth in this case, is actually felt by consumers, according to a 2020 report from the Transportation Investment Advocacy Center. (This is largely because fuel is subject to a complex pricing scheme involving the cost of crude oil and state demand for gasoline, and changes to the tax rate, which is paid by fuel vendors, are not always passed on to buyers.)

It’s certainly not going to do much to “ease the financial burden on everyday Marylanders,” as Maryland House Speaker Adrienne A. Jones and Senate President Bill Ferguson said in a joint statement.

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Nor is it going to translate “into dollars back in consumers’ pockets for groceries, childcare, rent, and more,” in any meaningful way, as governors from six states claimed in a letter to Congress last week calling for the suspension of the 18.4 cents per gallon federal gas tax through the end of the year — at a cost of about $20 billion. Using the formula above, the average driver in America would see an extra $3.63 in their pockets from this move.

So why the laser focus on this one issue? A few thoughts:

One, it feels good. Fuel prices have been rising for months along with increased demand from a return to pre-pandemic behavior, made possible by vaccination and waning COVID case rates. But they soared once Russia, the world’s third largest oil producer but largest exporter, invaded Ukraine, on expectations that resulting sanctions against that country would reduce energy flow. Cutting taxes on gas has the effect of making us think we’re somehow taking action against evil autocrat Vladimir Putin.

Two, it’s an election year for a lot of those clamoring for cuts, and they’re hoping the good feelings from a reduced fuel tax will translate to votes. House Speaker Jones and Senate President Ferguson, both Maryland Democrats, are up for election this year, as is Comptroller Peter Franchot, who first floated the idea of suspending Maryland’s gas tax; he is a Democratic candidate for governor. Our current Republican governor, Larry Hogan, also endorsed the idea, and he’s widely speculated to be a 2024 presidential hopeful.

Three, we can afford it right now, at least in theory. Maryland has a budget surplus of $7.5 billion and growing, which makes the $72 million per month it would cost to suspend our tax rate seem small by comparison. And we and other states have seen an influx of other funds through the American Rescue Plan Act (ARPA).

But is this really how we should be spending that excess cash?

Not if we’re trying to give lower-income Americans a break. The well-off, those in the top 20% by income, consume three times as much fuel as those in the bottom 20%, according to the Bureau of Labor Statistics Consumer Expenditure Survey. That makes the decrease a bigger gift to the rich than the poor.

Lowering gas prices through decreased taxes also disincentivizes reduced consumption, which is better for the planet, as well as your pocketbook. And it means less money to pay for critical infrastructure projects. Remember those things we were all fighting so desperately over a few months ago? At the federal level, the gas tax pays for the nation’s highways and mass transit. In Maryland, it pays for road projects among other efforts. There’s a real concern that once you cut that income source, you’ll never get it back. What politician wants to champion raising taxes again after they’ve been cut?

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That’s exactly what they should be doing, however.

The federal gas tax has been stagnant since 1993, a period over which it should have doubled to 37 cents, just because of inflation. During the same period, Maryland’s gas tax should have risen from 23.5 cents in 1993 to 47 cents today, per inflation. The state is not in as bad a shape as the federal government, but reducing a tax that hasn’t kept up with inflation is undercutting infrastructure efforts just the same.

The state’s surplus and others’ ARPA funds should be put into projects that will save gas money in the long term, including bikeable roads and improved mass transit. Make it easier for people to work from home and avoid commutes; give public employees incentive to live where they work. That’s how you provide real relief to your constituents — and lasting harm to President Putin.

Baltimore Sun editorial writers offer opinions and analysis on news and issues relevant to readers. They operate separately from the newsroom.


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