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Economist says proposed gas tax holiday could have negative long-term impact

Gas
Posted at 10:20 PM, Jun 22, 2022
and last updated 2022-06-22 23:55:23-04

TAMPA, Fla — President Joe Biden is calling for a 3-month gas tax holiday. It would waive the 18-cent fee that gas suppliers currently pay the federal government for every gallon of regular gas sold.

"I call on the companies to pass on every penny of this 18-cent reduction to the consumers," Biden said.

And it's a concept that isn't new to the state of Florida. Governor Ron DeSantis approved one—set for October—a few months ago. It will waive the 25-cent tax that gas suppliers pay the state.

Florida Gulf Coast University economist Victor Claar says the savings from that one-month period in Florida wouldn't be much for people at the pump, but it would be something.

"It would add up to about 40 dollars per household in Florida," he said.

If the President's proposal goes through, Claar says that people will have to wait and see how much savings they'll actually get. But he adds that a bigger concern is in regards to possible long-term repercussions of the tax holiday.

"If you give all Americans a gas tax break of about 18 cents or so per gallon for three months, that's $65-70 million dollars of federal tax revenue per day that your federal government will not be collecting, and one of the questions that I have as an economist is how will the federal government make up that difference," he said.

To help lower gas prices President Biden is also calling on oil refinery companies to increase production, so more refined gas can make it to the pumps.