NY should pump brakes on a gas-tax holiday
With gas prices sky-high and elections coming, it’s not surprising that New York politicians from both parties are pushing a gas-tax “holiday.”
Maryland recently approved 30-day gas-tax relief and Georgia’s break reinstates the tax on June 1. Federal legislators, too, are considering a break from the 18.4-cent federal gas tax, unchanged since 1993, and woefully inadequate to fund the nation’s roads. Were it indexed to inflation, as it should be, the tax would be 36 cents. Indexed to gas prices ($1.09 average at that time), it would be 72 cents.
Having kept it artificially low is enough of a break.
A vacation from gas taxes is ill-advised. It won’t end inflation-induced pressures on consumers, because inflation is economy-wide. It won’t help non-drivers. Much of the money would go to people facing no financial difficulties. The policy itself would be inflationary, putting more disposable income in the system. And gas rebate-check proposals, also under discussion in Albany and Washington, wouldn’t be much better unless they could be precisely targeted to those in need.
Worse, such breaks could lure people to drive more by making gas cheaper, increasing demand and raising prices further. And there is no guarantee wholesalers and distributors who actually pay the tax would pass the savings on to gas station franchisees, or that stations would pass them on to consumers.So prices could stay the same or decline but a little, and the governments instituting tax holidays would still lose revenue.
Cheaper gas promotes bigger, less-efficient cars, delays the switch to electric vehicles, and decreases public transportation use.
In New York, a proposal to stop collecting gas taxes from May 1 until the end of 2022 is in the State Senate’s budget proposal, and Assembly Majority Leader Carl Heastie says he’s listening. The taxes - charged by the state, counties and municipalities and varying with gas prices - equal about 67.5 cents per gallon when gas is $4.
In March 1980, inflation hit 14.8%. There was no federal or New York gas-tax holiday. In July 2008, gasoline hit an all-time inflation-adjusted high of $5.25 a gallon. There was no federal or New York gas-tax holiday. And that was wise. In both cases, high prices and inflation ended with massive recessions. It’s unlikely the tax would have been reinstituted when unemployment exploded.
There has never been a federal gas-tax holiday, and in short ones tried by Florida, Georgia, Illinois and Indiana since 2000, retailers mostly didn’t pass on all the intended savings.
Roads in disrepair cost New York drivers an average of $632 annually in repairs, depreciation and the like, according to a report by TRIP, a transportation research nonprofit. Want to save drivers money, time and frustration? Keep charging the taxes and fix lousy roads that cost us more than politically motivated gas-tax holidays could ever save.
MEMBERS OF THE EDITORIAL BOARD are experienced journalists who offer reasoned opinions, based on facts, to encourage informed debate about the issues facing our community.