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Published: Mar 15, 2022 4 min read
Gas prices rise to $4.35 a gallon in a town in USA
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Gas prices are increasing so quickly — and so drastically — that state legislators are intervening in hopes of alleviating residents' pain at the pump.

Their target? Gas taxes.

Across the country, governors and other lawmakers have begun pushing proposals that suspend gas taxes. The costs vary depending on where you are: On top of the federal gas tax of roughly 18 cents per gallon, states impose their own taxes and fees as a way to raise money for infrastructure. Those taxes range from about 68 cents per gallon in California (the highest) to about 15 cents per gallon in Alaska (the lowest), according to the American Petroleum Institute.

Now, with record-high gas prices that have jumped almost a full $1 per gallon in the past month, some states are looking to cut back.

They include Maryland, where Gov. Larry Hogan worked with leaders of the House and Senate on a plan to suspend the gas tax for 30 days (the bill is pending but expected to be signed this week). There's also Florida, where lawmakers have approved a budget that would include a gas tax holiday in October — a shorter break than the months-long reprieve originally pitched by Gov. Ron DeSantis. Georgia, too, where Gov. Brian Kemp has vowed to work with legislators to suspend the gas tax through May 31.

Politicians in other states have turned their attention to the federal gas tax instead.

Six Democratic governors, including Pennsylvania's Tom Wolf and Michigan's Gretchen Whitmer, penned a letter last week to Congress in support of the Gas Prices Relief Act. The bill, which they called "a tool in the toolbox to reduce costs for Americans," would pause the 18-cent tax until January 2023.

"It saves Americans at the pump by suspending the federal gas tax for the rest of the year," they wrote. "Money saved at the pump translates into dollars back in consumers’ pockets for groceries, childcare, rent and more."

Dollars in your pocket may sound great, but some experts argue that gas tax holidays aren't necessarily the right response to spiking gas prices.

Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center, wrote in a blog post that gas tax cuts could increase demand and drive up prices, which is "exactly the opposite effect of what these pols claim to want."

In his own post, Jared Walczak, vice president of state projects at the Tax Foundation, also said there's a risk that price reductions won't actually translate into consumers paying much less.

"In Florida and elsewhere, a gas tax holiday may be good politics, but it is unlikely to achieve its aims," Walczak wrote, adding that rebate checks might be a better way to help drivers.

If you're searching for other ways to save money on gas, consider paying with cash, joining a gas rewards program and adjusting your driving habits to improve your vehicle's fuel efficiency.

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