While President Joe Biden this week began urging Congress to suspend the national gas tax for three months and asking states to do the same with their gas levies, Ohio Governor Mike DeWine (R) came out against the idea.
The federal government charges gasoline buyers $0.18 per gallon and diesel motorists $0.24 per gallon. The Buckeye State meanwhile imposes a $0.385-per-gallon tax on gasoline as well as a $0.47-per-gallon tax on diesel and other fuel types. Both levels of government use the revenues from these sources to fund transportation projects. Biden maintains that dollars flowing to the U.S. Treasury are sufficient to prevent compromising federal highway repairs in the event of a three-month tax holiday.
“I fully understand that a gas tax holiday alone is not going to fix the problem [for consumers],” the president said. “But it will provide families some immediate relief – just a little bit of breathing room – as we continue working to bring down prices for the long haul.”
DeWine is not equally confident that a state tax suspension wouldn’t cost important transportation funding. Speaking to reporters, he cited figures from the Ohio Department of Transportation reflecting that the state takes in $355 million from Ohio’s gas tax over a 90-day period while localities receive $232 million.
He relayed that agency’s concern that forgoing such significant revenue would delay numerous highway projects and force their resumption at a time when inflation is likely to make them more expensive by an amount estimated at between $35 million and $73 million.
“Life is full of choices and no one likes to pay taxes. It’s very, very tempting, I think, for us to say, ‘Well, let’s just stop collecting state of Ohio taxes in regard to gasoline,’” DeWine said. “The consequence would be that this would imperil a number of different projects that we have going on in the state of Ohio. It would be a major, major blow to our ability to continue to fix highways [and] continue to fix dangerous intersections … .”
According to AAA’s gas-price calculator, the average gallon of gasoline in Ohio presently costs $4.932, about one cent under the national mean.
While national figures and various state governments have coalesced behind the idea of pausing gas tax collection to relieve consumers of some of that expense, experts of various political stripes argue that this could do more harm than good. University of California-Davis economist Aaron Smith observed this week that gasoline producers face an inelastic supply owing to capacity constraints that will not allow them to reduce prices.
“The gas tax holiday, were it to be enacted, would do little more than increase oil refinery profits. Consumers would not see any price reduction,” he wrote. “This conclusion will be wrong if refineries can find capacity to process more oil, but I don’t see any signs of that in the near future.”
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