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Gas tax holiday: Would it really help drivers?

As the cost at the pump keeps going up, some lawmakers are proposing a strategy to bring them down: temporarily suspending federal and state gas taxes.

HARRISBURG, Pa. — As the cost at the pump keeps going up, some lawmakers are proposing a strategy to bring them down: temporarily suspending federal and state gas taxes.

The federal gas tax sits at 18.4 cents per gallon, which hasn’t changed since 1993. Pennsylvania’s gas tax, meanwhile, is the highest in the country at 57.8 cents per gallon. Therefore, Pennsylvania drivers pay 76.2 cents per gallon in gas taxes.

Economists say eliminating those taxes, though, could come with more costs than benefits.

“Temporarily suspending these taxes would definitely help the consumer, but does it come along with other externalities?” asked Shishir Shakya, an assistant professor of economics at Shippensburg University.

A group of Democratic U.S. Senators has proposed cutting the federal gas tax through the end of 2022. Doing so would only save the average driver less than $8 a month, according to the Federal Highway Administration.

Meanwhile, suspending the tax for the rest of the year would cost the federal government $20 billion, according to the Committee for a Responsible Budget.

Most of that money goes to the nation’s Highway Trust, which is already dangerously short on funds and estimated to become insolvent within five years.

"Our highway infrastructure and other infrastructure in this country is currently in disrepair to a level that we haven’t seen in two, three, four generations," said Matt McMahon, assistant professor of economics at West Chester University. "So we should really be investing in infrastructure, not cutting its funding at this point."

Furthermore, McMahon said, cutting the gas taxes would likely not have a large effect on current historic inflation rates in comparison to other factors, such as the pandemic, supply chain snags and the Russian invasion of Ukraine.

“I really think that the federal gas tax has such a tiny, negligible effect in terms of how much inflation it causes that there’s not really much benefit to cutting it,” he said.

A few Pennsylvania legislators, such as State Rep. Tony Deluca (D-Allegheny), have proposed temporary suspensions of the state gas tax. State House Republican leadership said at a Tuesday briefing that they were cautiously considering similar proposals.

“We will review different policies that are before us, but these are short term solutions," said House Majority Leader Kerry Benninghoff (R-Centre). "This is about making decisions that are good policy decisions today, but also good policy decisions that are going to help that generation we hear behind us.” 

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