Will gas prices go down?Why Gasoline Tax Holidays Will Hit The Economy | Opinion


Maybe now we’ll stop hearing nonsense about the need for gas tax holidays.

Earlier this week, the AAA reported that gas prices had fallen below $4 a gallon in most lands (but not in Utah, where they averaged $4.65 as of Friday, according to the AAA). . That’s still well above the national average of $3.19 a year ago and miles away from the $1.15 per gallon recorded in Salina, Utah at the dawn of the pandemic on April 23, 2020. I’m here.

Remember that? Probably not. Because you are stuck at home, the economy is stagnant and you have nowhere to drive.

Gas prices could make Disneyland rides rival the old Tower of Terror. But the fear isn’t necessarily limited to the price itself.

If you are in public office, the urge to resist prudence can be overwhelming. Nearly everyone who votes drives a car, and despite the well-meaning efforts of many policymakers, nearly everyone who does still has a petrol car. With prices soaring, politicians feel a desperate need to do something.

That’s why gas tax holidays, which are periods when state gas taxes are suspended, are gaining popularity.

When prices peaked earlier this year, talk of enacting a federal gas tax holiday spread. Once upon a time, Washington’s dysfunction helped. But even some members of the Utah legislature have started talking about a mid-season tax moratorium.

Now, we can expect the story to die down, at least for a while.

A new report from the Washington Tax Foundation explains why this was a bad idea, and whether it’s for gas or other targeted purchases (e.g. school supplies), over the years the states that enacted these shows why they are not benefiting.

“The sales tax holiday creates an unwarranted government strain on the economy without giving the economy a big boost,” the report said. “They represent real costs to businesses without providing real benefits. It is also a means of

The problem, of course, is that this doesn’t fit on the bumper sticker. If so, few people would understand it. On the other hand, the phrase “a cheaper gallon of gas” resonates with almost everyone.

Politicians will argue that tax holidays will stimulate economic growth. People buy more of what is cheaper. But the current economy, silly as it may be, is not suffering from a lack of demand. Supply A series of bottlenecks, from failures in his chain to OPEC’s reluctance to increase production to restrictions on drilling in the US, have limited supplies.

So a gas tax break could actually push prices up by stimulating more demand.

The most obvious problem, of course, is that tax holidays take away the tax money the government has been hoping for in various programs. For a gas tax, it doesn’t make much sense to maintain and build roads.

Studies have shown that some jurisdictions in the District of Columbia, North Carolina, and Georgia have stopped using tax holidays because they are too costly. It said, “…experience shows that claims of economic stimulus, income increases, and consumer savings are greatly exaggerated.”

It would be far better for governments, including Congress and the White House, to focus on increasing the supply of gasoline or to enact long-term tax reforms that would give companies the guarantees they needed to invest in production capacity. does not do this as a result of the temporary tax gimmick.

According to the study, 17 states will implement tax exemptions in 2022 for clothing sales, school supplies, computer sales, energy costs, and more.

This is two fewer than in 2010, the height of the epidemic.

The price of gasoline tends to be used as an argument for voting for or against a candidate, so it can always be the main thing for political “do something”. In fact, today it is affected by many factors, such as the reluctance of oil companies and producers to increase supplies, the war in Ukraine, the international market. Currently, the economic slowdown appears to have reduced demand, which is contributing to the decline.

Gas tends to be cheap when you need it least and most expensive when you need it most.

Politics rarely pivots on the nuanced explanations and research of economists, especially in election years.

That’s why Utahans, and all Americans, should be happy that falling prices keep the gas tax holiday off the agenda, at least for now.





Source link

Leave a Reply

Your email address will not be published. Required fields are marked *