Politics

From stimulus payments to tax holidays, states scramble to alleviate pain at the pump

Elected officials throughout the country are scrambling to offer constituents relief from sky-high gasoline prices, and they’re trying multiple strategies, including gasoline rebates, stimulus checks, tax holidays and government-issued gas cards.

California is the latest state to propose giving drivers gas money as Los Angeles became the first U.S. city where the average price of regular gasoline topped $6 per gallon, according to the fuel-price tracking service GasBuddy.

Across the country, prices are up $1.37 per gallon since a year ago. The national average for a gallon of regular gas was $4.24 on Thursday, down 9 cents from its all-time high of $4.33 on March 11. In states like Nevada and Hawaii, the average is above $5 per gallon.

At least 18 state legislatures are actively discussing or already enacted a fuel tax holiday or other forms of gas tax relief, according to the National Conference of State Legislatures. Governors from at least eight states support or have signaled they would support such measures.

Here are some ways politicians want to help drivers offset bloated prices at the pump, which were already trending upward when they were exacerbated by Russia’s invasion of Ukraine.

Gas tax holidays

Several states have imposed — or are taking steps to impose — gas tax holidays. How long the relief lasts and how much it will make an impact will vary.

Maryland and Georgia enacted gas tax holidays last week.

Maryland’s 30-day holiday gives a 36-cent-per-gallon break to motorists through April 16. Gov. Larry Hogan, a Republican, has called on lawmakers to extend it for two months. 

Georgia’s gas tax holiday will last through the end of May, suspending its roughly 29-cent-per-gallon tax.

Though both states have Republican governors and Georgia’s general assembly is GOP-controlled, Senate Republicans in Congress criticized the measures as “gimmicks” that are “just a Band-Aid on a bullet hole.”

Florida lawmakers last month approved a one-month gas tax holiday as part of its budget. Drivers will save 26.5 cents per gallon but not until October, the month before Republican Gov. Ron DeSantis will face reelection. It still needs the signature of Mr. DeSantis, who has called for a five-month-long holiday that would cost $1 billion.

Other state legislatures considering similar proposals are California, Colorado, Idaho, Illinois, Indiana, Maine, Michigan, Minnesota, Missouri, New York, Ohio, Pennsylvania, Rhode Island, Tennessee and Washington.

Governors in California, Illinois, Massachusetts, Minnesota and Virginia also signaled support for such a measure.  

Efforts in Congress by some Democrats to implement a federal gas tax holiday have so far failed to muster wide-ranging support among their own members, much less from Republicans. 

The opposition is twofold. Critics say the 18.4-cent-per-gallon break is a pittance for individual drivers and it would blow a roughly $20 billion hole in the Highway Trust Fund for transportation projects.

Patrick De Haan, the founder of the fuel-price tracking service GasBuddy, wrote in a tweet that proposals like gas cards and tax holidays are “akin to handing a bottle of Jack Daniels to someone that’s already drunk. It enables high prices and high demand.”

Rebates and direct payments

A slew of Democratic proposals center on providing direct relief in the form of energy rebates, tax credits or direct stimulus payments.

Thanks to pandemic aid appropriated by Congress, many states have surpluses that they’re looking to use for direct relief.

California Democratic Gov. Gavin Newsom unveiled a plan this week as part of an $11 billion gasoline relief package to provide vehicle registrants with $400 debit cards regardless of income, up to a max of $800 for those with more than one registered vehicle. Democratic state lawmakers have also made similar proposals ranging from $200-$400 taxpayer rebates.

“Newsom wants to swell California gasoline demand at a time of refinery challenges and high prices,” GasBuddy’s Mr. De Haan tweeted. “This will end badly. Politicians must resist the urge to get in the middle of markets and let it run its course.”

In Maine, Democratic Gov. Janet Mills wants to increase the amount of already-proposed relief checks to $850 per person by dipping into its budget surplus.

At the national level, Democratic Reps. Mike Thompson of California, John Larson of Connecticut and Lauren Underwood of Illinois have proposed sending each American $100 per month for the rest of the year or in any month where the national average gas price exceeds $4.00 per gallon. 

Similar to the stimulus checks provided in COVID-19 economic packages from Congress, individuals making less than $80,000 per year and couples earning less than $160,000 would be eligible.

Rep. Peter DeFazio, Oregon Democrat and chair of the House Transportation and Infrastructure Committee, introduced a one-time windfall profit tax for Big Oil companies in the wake of corporations reporting record profits last year. The tax would be 50% of profits that exceed 110% of their average adjusted taxable income from 2015-2019 before the pandemic and return it to consumers in the form of a monthly tax credit.

Democrats in both chambers have gotten behind a similar windfall tax proposal led by Rep. Ro Khanna of California and Sen. Sheldon Whitehouse of Rhode Island. Also aimed at preventing price gouging, their legislation would levy a 50% tax on profits when oil is above $66 per barrel — the average price from 2015-2019 — and give a $240 rebate to taxpayers for single filers and $360 for joint filers. The tax would only apply to large corporations that produce at least 300,000 barrels of oil per day.

IRS gas cards

The White House was at one point considering having the IRS send Americans gas cards but ultimately nixed the idea in the face of congressional pushback and questions about feasibility and effectiveness, Axios reported.

Republican senators slammed that idea and other Democratic proposals such as direct payments, rebates and tax holidays. The Republicans contended that these cash giveaways would only make overall inflation worse.

“Clearly, what this administration has concluded is that they can throw some gimmicks at this issue,” Sen. John Thune of South Dakota, the No. 2 Republican, told reporters this week.

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