The Biden administration knows we’re all struggling at the gas pump. Between presidential policy changes, Russian embargos, and oil companies’ earning record high profits, gas prices are in a perfect storm that doesn’t look to stop anytime soon. Now the Biden administration won’t overturn any of the policies, regulate gas companies, or find alternative oil sources, but they do want to freeze taxes. The administration will officially decide if they want to put a 3-month freeze on the federal taxes on gas, and they are asking states to join them. However, Ohio’s governor, Michael DeWine, has no interest in freezing taxes. The question remains: who is right, and will a fuel tax holiday even help?
Didn’t Ohio Already Turn Down a Fuel Tax Holiday?
Back in March, representatives thought about freezing the state tax on fuel. Many states seriously considered this, with a few following through. Governor DeWine turned down the proposal, as did many other states. It just didn’t make sense to them. The relief at the pump would be so minimal compared to the total price of gas. The state tax for gas in Ohio is 38.5 cents a gallon for regular and 47 cents per gallon for diesel. The federal tax is 18.4 cents a gallon. If a person drove 15,000 miles (the average annual miles driven by a person) with a fuel consumption average of 25 mpg, they would pay roughly $231 in taxes. Saving two hundred dollars a year is no small feat, but the tax freeze isn’t for a year. It’s only for three months. That’s barely 60 bucks in savings, but the state and country could lose billions.
How much Does the State make in Gas Taxes?
Back in 2019, Governor DeWine passed a law to hike the fuel taxes in Ohio. This raised the state tax from 28 cents to 38.5 cents. They wanted to increase the tax to help pay for roads, maintenance, and future development projects. In 2021 alone, the tax increase brought in $2.4 billion to the state. With these funds, state officials built projects and improved parts of Cleveland. Without these taxes, Ohio could sink backwards despite its recent success.
DeWine promises that he will review the new Biden policy before making any official statement. However, it doesn’t look promising that he’ll follow through. Most people are skeptical about the fuel Tax Holiday. They claim that it’s not enough to matter at the pump. Prices are just too high, so even a forty-cent discount wouldn’t be enough. Also, gas companies may not even pass the savings to their customers. They could just pocket the difference and not rake in even more profits. It’s up to the gas company to regulate. Historically, gas companies are not known for doing the right thing.
At the end of the day, it’s going to take more than a simple fuel tax holiday to get things right at the pump. Prices just keep rising, and it doesn’t look like there’s an end in sight. In fact, this fuel tax holiday could mean that the administration has no plan. We’ll find out later this week if the Fuel tax holiday continues and how it affects the economy. Will people be elated that the price of gas is reasonable again? Or will the lost tax revenue crumble an already inflated economy?