Gas tax holiday? It's a gimmick, and Biden and Evers should both do it

As the 4th of July looms in 2 weeks and gas prices remaining high, the Prez is thinking of making a move to bring those prices down ….a bit.

President Joe Biden said Monday that he's considering a federal holiday on the gasoline tax, possibly saving U.S. consumers as much as 18.4 cents a gallon.

“Yes, I’m considering it,” Biden told reporters after taking a walk along the beach near his vacation home in Delaware. “I hope to have a decision based on the data — I’m looking for by the end of the week.”…

The Biden administration has already released oil from the U.S. strategic reserve and increased ethanol blending for the summer, in additional to sending a letter last week to oil refiners urging them to increase their refining capacity. Yet those efforts have yet to reduce price pressures meaningfully, such that the administration is now considering a gas tax holiday. Taxes on gasoline and diesel fuel help to pay for highways.

The Penn Wharton Budget Model released estimates Wednesday showing that consumers saved at the pump because of gas tax holidays in Connecticut, Georgia and Maryland. The majority of the savings went to consumers, instead of service stations and others in the energy sector.

I’m generally not a fan of such gimmicks, because you’re taking quite a bit of money out of highway funds, and you gotta make that up somehow. But I’d argue that June 2022 is a good time to do it for 2 reasons.

1. As part of last year’s Infrastructure Bill, the Highway Trust Fund got a one-time shot of $118 billion in General Fund revenues (aka – not gas taxes or registration fees). That’s nearly triple the revenues it gets in a typical year, and so that Trust Fund can handle not getting a few billion of gas taxes for a month.

Of course, that would accelerate the dwindling of the Highway Trust Fund over the next 5 years. But those funds can always be found from numerous sources, and kicking the can down the road shouldn’t be front of mind when you have to deal with gas prices NOW.

2. The infrastructure bill means we are setting aside more money to fix highways and fund transit as it is, and there won’t be a need to cut those projects in 2022 even if there aren’t a few weeks of gas tax revenue.

Again, not having that money in the bank now means you may not be funding everything you planned in 3-4 years. But honestly, so what? A main point of the infrastructure bill is to accelerate things that were supposed to happen later anyway.

So I think a federal gas tax holiday, combined with oversight that makes sure the savings are passed onto consumers, would be something that could be decent policy for the next few weeks. I also think this could be done at the state level in Wisconsin, in a couple of different ways.

The first reason a state gas tax holiday (of some amount) can work is due to the infrastructure bill. Remember that Wisconsin is getting $283 million in additional highway funds for this fiscal year, which is around what the state is slated to collect in gas taxes for 3 Summer months.

Now, you wouldn’t want to avoid adding to the number of road projects, but perhaps cutting the state’s 32.9 cent gas tax in half for the Summer or dumping it entirely for 1 month could work out. There would still be enough funds available to fix more roads and give relief at the pump for drivers in Wisconsin.

That could be done through Governor Evers ordering the Wisconsin Department of Revenue not to collect gas taxes for a certain time period (what, is someone going to sue to make them add price to the pump?) The other way a Wisconsin gas tax holiday could be done in Wisconsin would be for Evers to do something that makes the GOP Legislature put up or shut up.

Evers could call a special session that has one simple purpose – to send a small portion of the state’s $3.8 billion budget surplus to the state’s Transportation Fund, replacing the loss of funds that would result from a gas tax holiday.

This would make the Legislature have to choose between giving Governor Evers what he wants (but also looking decent to voters themselves), or having another issue where they do nothing, giving Evers and Dems an attack angle of “those gerrymandered GOPs won’t do JACK about gas prices. They don’t give a damn about how Wisconsinites are hurting.”

Again, I admit that it’s a gimmick to have a gas tax holiday. I’ll add that I think it is bad policy when we already have longer-term challenges in funding our roads and other transportation needs at both the state and federal levels. And that work needs to resume in a couple of years as those funding challenges will come back to a head.

But in this time of what seems to be a temporary and bullshit spike in gas prices, and with DC’s infrastructure bill giving a fiscal cushion while allowing for more road investments to continue, it can work. I’d say both Biden and Evers should do it, and announce it this week before 4th of July travel ramps up.

Evers can get an extra benefit of bringing more anger against the gerrymandered GOP Legislature. It would go along with a campaign theme that Evers and WisDems really do care about the issues facing Wisconsinites, while GOPs are Big Liars who’d rather play games than solve problems.

So DO IT, Tony!