Home Analysis My take: About that gas tax holiday

My take: About that gas tax holiday

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My take: About that gas tax holiday
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Hello everyone,

As gasoline rocketed past $4 a gallon for regular Russian troops invaded Ukraine, motorists and some politicians have called for a suspension of federal and state gas taxes.

While the measure would score public relations points, the impact might not be great.

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Next door neighbor, Maryland is on its way to enacting a 30-day suspension of the gas tax, an idea championed by Gov. Larry Hogan.

But as a Biden Administration official noted, there is no assurance that a reduction would be fully passed along to motorists. The pricing of fuel remains a murky process, complete with futures contracts, wholesalers, and retailers. Overall, the system works, but has its share of quirks.

Delaware’s legislators have long bragged about the First State’s low gas gasoline tax. But would suspending that the tax provide relief for First State businesses and consumers?

A while back, one of our readers suggested subtracting the price at the pump from the gas tax to arrive at what motorists might pay if no state gas tax was in effect. (The federal tax adds an additional 18¢ a gallon.)

StateGas price State taxNet gas price
Delaware$4.2123¢$3.98
Maryland$4.2737¢$3.90
New Jersey$4.3342¢$3.91
Pennsylvania$4.4259¢$3.83
AAA Monday gas prices

One question? Is it that much more expensive to bring gas into Delaware, a state with its own refinery?

A long-term suspension of the tax is a nonstarter since transportation improvements are financed by the tax and backed by bonded debt.

Still, a 30-day holiday on the tax is a good idea as we wonder why convenience store giant Wawa suddenly cut prices by a dime a gallon overnight at many of its locations. As crude oil prices dropped a tad in recent days, the lower prices remained. –Doug Rainey, chief content officer.

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