Why might Democratic office holders be interested in temporary elimination of federal and state gasoline taxes?
An ad released this week by the National Republican Campaign Committee offers some explanation. Aimed at 10 incumbent Democratic U.S. House members who represent battleground districts, the spot attempts to tie the lawmakers to President Biden and rising prices. “The blame for record-high gas prices lies solely at the feet of Joe Biden and House Democrats,” U.S. Rep. Tom Emmer, a Minnesota Republican and chair of the campaign committee, said in a statement announcing the ads.
Among those targeted is U.S. Rep. Angie Craig, who represents Minnesota’s 2nd Congressional District.
Whether gas prices are a record depends on how comparisons are made and how inflation is accounted for, but it’s true that they’re higher than they have been in a decade and a half. The cost had already been rising when the Russian invasion of Ukraine put further pressure on prices.
In Minnesota, imposing a gasoline tax holiday, especially over the summer vacation driving season, could cut per-gallon prices by 47 cents. Which is among the reasons why, two weeks ago, six Minnesota House DFLers proposed legislation to stop collecting the state’s 28.5 cent per gallon tax from Memorial Day to Labor Day.
The revenue — around $70 million a month that goes into the trust fund that pays for roads and bridges — would be backfilled with cash from the state’s $9.25 billion surplus.
Gov. Tim Walz, himself up for re-election this year, said he could support such a move and was one of six Democratic governors calling on Congress to halt collection of the 18.3 cent federal gas tax. “I think we understand the cost of doing that because people who say, ‘Just suspend every tax and we’d have a lot more money,’ but then we wouldn’t have any roads either,” Walz said. “But at this point of time, with inflationary pressures, Russian aggression and activities in Ukraine, I think it makes a lot of sense.”
Walz said it would be a way to reduce costs immediately on Minnesotans, something he has argued his proposed tax rebate checks would also do.
The proposal puts Republicans in an awkward place politically. Inflation will be an issue come fall, and it is easy to place the blame on the party in power. Anything that appears to lessen the impact of higher prices works against that talking point. At the same time, tax cuts have long been a staple of the GOP agenda, and appearing to oppose a tax cut wouldn’t be good politics either.
[image_credit]MinnPost photo by Peter Callaghan[/image_credit][image_caption]Gov. Tim Walz: “At this point of time, with inflationary pressures, Russian aggression and activities in Ukraine, I think it makes a lot of sense.”[/image_caption]
[image_caption]State Sen. Michelle Benson[/image_caption]
Whitmer joined Walz in supporting bills in Congress to suspend the federal gas tax for the rest of 2022. “At a time when people are directly impacted by rising prices on everyday goods, a federal gas tax holiday is a tool in the toolbox to reduce costs for Americans, and we urge you to give every consideration to this proposed legislation,” read the letter from Walz, Whitmer, Wisconsin Gov. Tony Evers, Colorado Gov. Jared Polis, New Mexico Gov. Michelle Lujan Grisham and Pennsylvania Gov. Tom Wolf.
The DFLers who proposed the state gas tax holiday are all also in battleground legislative districts — in the Twin Cities suburbs, St. Cloud and the Iron Range — places where the holiday could help their re-election bids.
But they face attacks from both their political left and political right. “This is just another election year gimmick from the Democrats,” said Senate Majority Leader Jeremy Miller, R-Winona, who said it is better to permanently cut income tax rates.
DFLers from more liberal districts, a group that includes the DFL Chair of the House Transportation Committee and the DFL lead of the Senate Transportation Committee, have also criticized the proposal.
This legislative member of the DFL, and lead on transportation in the MN Senate, is opposed — as are a number of other DFLers in both the House and Senate.
— Scott Dibble (@ScottDibble) February 25, 2022
Others in the DFL constituency think lowering gas prices encourages driving and thus increases greenhouse gasses. And there is a relationship between the cost of driving and use of transit, which fell during the pandemic and has still not recovered.
I ran the numbers the other day for a person driving the Minnesota average number of miles per year (almost 19,000) and getting 20 mpg with their vehicle. A gas-tax holiday works out to about $.70 a day for them.
“The revenue — around $70 million a month that goes into the trust fund that pays for roads and bridges — would be backfilled with cash from the state’s $9.25 billion surplus.” –Hah!
So they decide to give the voters a .47 gas break. The gas tax money is already spent so where is the state going to get their money? Same folks they gave the .47 gas break will make up for the gas tax break. Shell game at its finest!
The article explains how MN will replace the revenue.
Dave, really?? They can’t even figure out how to pay essential workers from COViD and you think they will just take 350-400 million dollars from the surplus to pay gas tax . This is just a political ploy to try and fool folks…. Most folks won’t be fooled by words, they actually wait for action and results.
You know Joe this pains me, but, we agree the $ have to come from somewhere, steal from Peter to pay Paul, and sooner or later you have a sore Peter!
This made me chuckle out loud. Thanks!
Let’s remember oil companies are making record billions in profit AND receive very large subsidies from our tax dollars already. Seems stronger laws to stop price-gouging would be more effective.
They have also clearly said they will not increase drilling at this time to increase supplies. Emmer blaming Biden for high gas prices should call up a few of those energy company executives and invite them to explain themselves.
There are two categories. Those with heavy work miles, required by their jobs, and those whose drives are for pleasure. The third invisible category is those without a car. I would let those who drive for work keep track of and deduct their tax, including commuting miles.
The last group gets no benefit. Their fares on transits are affected by fuel costs, but they get no benefit. Perhaps we should waive transit fees for the summer.
Lower costs for driving will increase fuel use, increasing miles driven and direct fuel costs. The biggest beneficiary. Wealthy households with weekend trips to cabins with gas burning boats, cycles and off road vehicles. Another tax break for the rich.
This is a time for conservation – driving fewer optional miles in single purpose solo trips, new gas saving driving habits, riding transit and shifting to non motorized and electric vehicles. A tax holiday undermines all of this. Changing our behavior to curb petroleum wars is long overdue.
First off, wealthy people aren’t going to drive more because of this. $10 a month savings in gas means nothing to wealthy people, especially in an era where a restaurant hamburger costs $20 after tax and tip.
Another tax break for the rich? You mean like the Walz checks or whatever they’ll get renamed to that will be given to all the people who didn’t pay anything in tax? Or are you talking the Child Tax Credit where you get paid money just for having kids, or the Earned Income Tax Credit or subsidized health care via the ACA, or….
Listen, I’m in support of all the programs above, but this “tax break for the rich” trope for everything gets old. The gas tax holiday is mostly posturing because the price at the pump is a very visible indicator of inflation.
By the way, you’re worried about a potentially $30 tax break for the rich but support EVs where wealthy people have gotten and are still getting $7500 to buy $50,000+ cars. Quite the paradox.
I’m very surprised the writer neglected to mention that there is every reason to believe that a 47 cent reduction in the gas tax would not result in a 47 cent reduction in the price at the pump.
The oil companies are making money hand over fist, and this would be an opportunity to increase soaring profits even further. No, thanks.
This reeks of gimmicky election year legislation. Oil is already down 30% from this month’s high and gas prices didn’t touch 2008 levels, especially when adjusted for inflation, when everyone got by without a gas tax holiday. I did make choices that worked to insulate my exposure from being impacted to that extent again: bought a better MPG vehicle when that cycle was up, chose to live a convenient commute from my employment, and combine trips where possible.
The only way I could be in favor of this is if the gas tax is reinstated with an automatic rising with inflation mechanism so roads actually get proper funding going forward without having to touch the third rail of tax increases.
It’s a terrible idea for several reasons.
The first reason is the current gas tax doesn’t even collect enough money to pay for upkeep on our roads and bridges. We’ve been borrowing from the general fund to cover shortfalls in the gas tax for years.
Second, the gas tax is not paid by just Minnesotans – it also is paid by people traveling through Minnesota and acts as a user fee for driving on our roads. Why would we want to replace that with income or sales taxes paid only by Minnesotans?
Third, the law of supply and demand would dictate that prices would rise to close to the same level with or without the gas tax. The primary benefit would be to the companies selling gasoline, not the consumers. Oil and gas companies don’t need another tax break, they’re already making record profits.
I would actually support increasing the gas tax, which is not high compared to other states, to cover the actual costs of maintaining our roads. I would rather decrease our sales tax, which is one of the highest in the country. Decreasing the sales tax would be more effective at countering inflationary pressures.
Maybe if we haven’t spent billions, that’s with a “B” for a 19th century technology train that is inflexible, out dated, obsolete, over priced, under utlized, over subsidize, and could NEVER dream of breaking even, and is years behind in construction and managed by a group of individuals who are as clueless as the idiot who appointed them. All the time we have to maintain a backup of busses because if the choo choo breaks down or has an accident we have to replace it with busses. We could have excess monies’ in the funds needed for upkeep and repairs of all state roads and bridges with funds dedicated to such a causel. But we know democrats think that it will make us just like cali, the socialist/communist dream of the DFL.
The gas tax is mandated by law to be spent on roads and bridges. You are showing your ignorance of how transportation is funded in Minnesota. Stop the ad-hominem whining and learn how the government actually works.
As soon as you start to advocate to pay for roads 100% based on the number of miles somebody drives and are willing to end subsidies for the petroleum industry you might have some credibility. Of course, that would mean all the exurban and rural Republicans would actually have to pay their share and we know they love “socialism” as long as they are the recipients since red states and counties are largely the ones most dependent on government largesse.
I prefer we subsidize roads even for those rural Republicans. I like the fact there are groceries at the store when I need them and they wouldn’t be there without roads.
The urban democrats in Hennepin County have a heavily subsidized $2 billion South West Light Rail project that is now over budget by $500 million and is two years behind schedule.
It’s now $2.5 billion and the people who say we need it won’t use it. We will subsidize it for the remainder of its existence just as we do the failed Gold & Green line. I doubt the rural Republicans will be riding on it but at least they would pay their fare if they did. Roads aren’t needed or used just by Republicans.
The roads to productive areas would still exist it would just be that the businesses that require them would be paying for them. The thing Republicans pretend they think is the right way to do things. Besides, a big chunk of “farmland” is used to take advantage of even more subsidies by growing ethanol (about one-third of all crops) which doesn’t do anything to put food on shelves. Just money into the pockets of farmers.
I have always been opposed to light-rail because it simply isn’t an efficient use of resources. You can see plenty of my recent comments here to that effect. However, that doesn’t take away from the clear hypocrisy of rural Republicans every time they complain about socialism while being the biggest recipients of government funds per person. The idea our tables would be empty (an excuse I hear all the time from farmers for their dependence on welfare) simply showcases that they don’t actually think the free market works. That their real goal is to game the system and privatize their profits while socializing the risks.
The idea of the salt-of-the-earth hard-working, independent, patriotic rural community is a complete myth. One that is used to mask the fact that they are completely dependent on the taxes of urban areas and people who they often define as not sufficiently American.
“19th Century technology train…inflexible, out-dated[etc]…choo-choo…”
Um, have you ever traveled outside of the US of A, Ed? Lotsa trains, let me tell you!
How ever can it be explained?
Unless it’s means-tested for individuals or families – Highly unlikely, don’t you think? – a gas tax holiday strikes me as a bad idea. Not only might it encourage more driving, with all the environmental downsides that go with that, it doesn’t make a lot of sense to me fiscally. With a few exceptions (I’ve had a couple of horrible bosses, too…) most of us would not quit our jobs because our tax refund arrived in the mail, and this seems like an equivalent situation. Yes, the state has a big surplus – and a good thing, too, as the backlog of state-financed projects is a long one – but the surplus is a one-time infusion of cash, not a reliable source of income, and there is already a lengthy list of spending proposals that collectively add up to more than the surplus provides.
I share Ms. Wicklow’s skepticism about backfilling the $70 million/month, mostly because Republicans and Democrats in the legislature can’t even agree on how to repay money both parties DO agree we borrowed from the federal government during the height of the pandemic. Actual cooperation on something sensible seems, at best, a 50-50 bet, and we know from the past few years of experience and observation which of the two parties is least likely to be willing to compromise.
In an unfair example – I don’t claim this is representative – my hybrid car accumulated 6,264 miles from March, 2021 to March, 2022. About half of those miles (3,124) were counted by the odometer in and around Minneapolis. The remaining 3,140 were added on a lengthy road trip to the North Shore, and then to Glacier National Park in Montana. The 3,124 miles driven locally used, at most, 78 gallons of regular gas (mid-50s mpg in warm weather, mid-30s mpg during the winter). At a savings of 47¢ per gallon, a gas tax holiday on the 3,000+ miles driven in Minnesota would save me $36.71. If I drove what my insurance company says is an average number of miles per year – about 12,000 – in and around Minneapolis, the savings would be $141, or about $2.70 per week. Yes, every dollar counts, especially if you’re working a crap job with minimum pay, but I’m going to suggest that a savings of $2.70 per week is not going to provide a significant boost to your standard of living. Multiplied by many thousands of drivers, it’ll deprive the state of a sizable chunk of income without providing an equivalent financial benefit for most Minnesota taxpayers.
The only real solution is to reverse the Joe Biden disastrous energy policies.
The dems will not do this so they own high gas prices and high inflation . The voters will remember.
Clearly the trillions of dollars of subsidies we give the oil and gas industry are not leading to cheaper prices at the pump. I agree, let’s end the welfare for oil companies and re-invest in alternative energy sources.
Two years ago today, Joe Biden promised to end the oil industry in America:
“No more subsidies for the fossil fuel industry. No more drilling on federal lands. No more drilling, including offshore. No ability for the oil industry to continue to drill, period, ends.”
This is one promise Joe and the democrats kept. Gas is now $4.32 a gallon in the US.
Domestic oil production is higher now than it was during most of the previous administration. The bigger issue that will help is when Trump’s two-year agreement with OPEC to reduce output in order to prop up prices and profits for the oil industry and his pal Putin. Something Republicans seem to conveniently forget while they are focusing on using the actions of a war criminal and despot for cheap political points. Tucker really is both the voice of Putin and Republicans at the same time.
Dan, oil production is down 1 million barrels a day from 2019, fact. Green energy cannot support a major metropolitan area, we need oil/gas now. Please drill here instead of buying from Russia, Mid East or South America.
It is still higher than it was in 2016 and through most of TFGs tenure. Plus, you continue to avoid the elephant in the room which is Trump’s deal to reduce global production. We are drilling here and production continues to increase after the COVID induced reduction in demand and production. Oil companies have the same leases they did two years ago when domestic production was at its peak. Any reduction from that level is 100% on them.
But the truth is that the only way to true energy independence and security is through green energy production. Republicans, unfortunately, would prefer to benefit their Russian donors and oil industry friends than make that happen. In the meantime, they also seem happy to use any increase in gas prices due to Putin’s war crimes to their political advantage. It shows clearly Republican priorities.
It is impossible to solve the problem of increasing oil prices through drilling more. All the easy to access oil has been found and exploited. Everything left is more expensive to extract. The only way to attack the problem successfully is by reducing demand.
Thank you; exactly right, at least as to the remaining oil deposits in North America.
Unfortunately this irrefutable reality is denied by 98% of those calling themselves “conservatives”, and God knows how many who are left of center. It apparently can’t be understand that the price per barrel must be relatively high to make expensive extraction methods like fracking and deep water drilling economical. Leave aside drilling in Arctic regions.
Of course, it is a huge economic benefit never to have to restore the wrecked ecosystem(s) after the (inevitable) spills as well…
I am not aware of any cancelled subsidies for oil and gas. Can you detail which ones were actually cancelled? Campaign rhetoric doesn’t actually change things.
I actually found a couple of cancelled subsidies. They don’t explain the rise in gas prices (at all). There are tens of billions of dollars of fossil fuel subsidies that can only be ended by act of Congress.
https://www.politifact.com/factchecks/2022/mar/17/bill-oreilly/bill-oreillys-misleading-statement-biden-and-fossi/
Have gas prices gone up? I hadn’t noticed. It’s a nice thing to not care about.
Will Republicans quit whining about how I don’t pay gas taxes using my electric vehicle if they get their tax holiday? Will I maybe get a 25 percent refund on the annual road upkeep EV surcharge that’s added to my registration fee to balance a 25 percent of the year gas tax holiday?
I’m rather surprised at the strong opposition to this proposed gas tax holiday, as it clearly is envisioned as a (very) short term mechanism to aid those who stuck with high(er) gas consumption right now. It is not proposed as some “new normal”, but purely as a response to both the supply shocks of the pandemic, as well as the unexpected extreme militarist aggression of Vladimir the Terrible, which has necessitated another shock to oil supply. It’s not like the proposal is to throw out (or even reduce) the gas tax for good; this would be a very short term measure to give (many, not all) Americans being hit with supply chain disruptions some breathing room on the substantial price increases that the oil industry is gouging the nation with.
Is it better than (finally!) regulating the price of gas to reduce the obscene profits of the oil companies? No. Should Dems also be proposing a national oil and gas commission to permanently regulate gas prices? Yes. Does a three month gas tax holiday really make driving a gas-guzzling Monster Pickup or SUV a sensible idea going forward? No, of course not, and anyone who thinks that it is going to make economic sense to drive such low mpg behemoths in the coming decades (still) can’t see the future too clearly.
But as a short term response to Putin the Terrible’s War and the pandemic’s supply squeezes? Yes, it seems reasonable.