New York and New Mexico latest states to offer fuel tax relief
Action taken this week in New York will add the state to the list of states to approve a fuel tax holiday for at least certain drivers.
Maryland, Georgia, and Connecticut also have taken action.
In New York, Gov. Kathy Hochul and state lawmakers reached a deal on Thursday, April 7, to include a fuel price break in a new $220 billion state budget. The plan calls for partially suspending the state’s fuel taxes for seven months.
The state charges about 33 cents per gallon for gas and diesel. There are multiple components that make up the state’s fuel tax collection.
There is an 8-cent excise tax and a 17.3-cent petroleum business tax. Additionally, there is an 8-cent state sales tax.
The deal reached would trim tax collection by 16 cents per gallon. Specifically, excise tax and state sales tax collection would be suspended from June 1 through the end of the year.
New York’s excise tax and the sales tax raise about $485 million each per year.
The tax break is projected to cost the state $585 million in lost fuel revenue.
New Yorkers are feeling pain at the pump, and we’re offering them relief.
We will tackle rising gas prices by suspending the state fuel sales tax and motor fuel tax from June through December — expected to provide relief up to $585 million.
— Governor Kathy Hochul (@GovKathyHochul) April 7, 2022
Gov. Hochul said she will also call on local governments to consider cutting their fuel taxes.
“We have to look at our people where they are and meet them where they are right now at this time of great stress,” Hochul said at a news conference announcing the budget deal.
Critics in the state say the fuel tax holiday is a bad idea because tax collection is needed to incentivize people to drive less and rely more on mass transit. They add that the tax money also helps to pay for more environmentally friendly transportation options.
Action elsewhere
Efforts continue around the country to provide similar relief from high fuel costs for motorists and truck drivers. Some actions underway at statehouses are included below.
In New Mexico, a deal has been reached at the statehouse to provide a gas tax rebate.
During a special session this week, legislation was approved to give single tax filers a $500 rebate check. Joint filers would receive $1,000.
The money would be made available in two separate payments, with the first payment by June 30. The second check would follow in August.
The bill, HB2, now moves to the governor’s desk.
This year we’ll deliver up to $1,500 in household relief to over 1 million New Mexicans, helping to offset the nationally rising prices of gas, groceries and other goods and services.
I look forward to getting these funds into the pockets of New Mexicans.https://t.co/T5wtFZQA4r
— Governor Michelle Lujan Grisham (@GovMLG) April 7, 2022
Virginia
Virginia Gov. Glenn Youngkin has sent legislation to the General Assembly to suspend state fuel tax collection for three months.
Virginia collects a 26.2-cent-per-gallon tax on gas and a 27-cent rate for diesel.
The governor is calling for the tax holiday to run from May through July, and to phase it back in slowly in August and September.
Youngkin said the state could absorb the lost revenue by tapping into excess transportation funds. The amount needed is estimated to be about $437 million.
“With gas prices and inflation squeezing families’ pocketbooks across Virginia and the nation and with over $1 billion in unanticipated revenue in our transportation fund, the General Assembly must act now,” Youngkin said in a news release. “Virginia should join numerous other states, led by both Republicans and Democrats, in temporarily suspending the gas tax. Actions speak louder than words, we can lower gas prices now for all Virginians.”
His plan would also cap the annual adjustment to the fuel taxes at no more than 2% per year “to further protect Virginians from the hidden tax increase of inflation.”
The bills, HB6001 and SB6001, can be considered during the special session.
Florida
In Florida, state lawmakers have reached agreement on a gas tax holiday initially pursued by Gov. Ron DeSantis.
The legislature approved a state budget that includes a one-month gas tax holiday. The tax holiday from collecting the 27-cent tax rate would be for the month of October.
A portion of the state’s federal stimulus dollars will be used to cover the estimated $200 million in lost gas tax revenue.
DeSantis had sought a six-month gas tax holiday to provide more than $1 billion in tax relief.
Tax holidays shot down
Despite the trend nationally to pursue fuel tax relief for at least some consumers, the idea is not taking hold in some states.
Governors in Arizona and Arkansas say they are opposed to a fuel tax holiday. Statehouse leaders in California, Iowa and Massachusetts have also declined to provide price breaks at the pump.
In Michigan, Gov. Gretchen Whitmer followed through on her veto threat of a bill to suspend the state’s 27-cent tax on gas and diesel for six months.
Instead, the governor wants to address the state’s collection of sales tax on fuel purchases. Specifically, her plan is to suspend the state’s 6% sales tax on gas and diesel.
Whitmer said her plan is better than the fuel tax holiday because it would keep intact road and bridge funding.
“A short-term pause is a fiscally responsible action we can take that will provide drivers relief at the pump right now,” Whitmer stated.
Fuel tax holidays enacted
Maryland was the first state to take action on a fuel tax holiday.
State law authorizes fuel rates to be adjusted each July based on the consumer price index. Since July 1, 2021, the gas tax has been set at 36.1 cents and the diesel rate at 36.85 cents.
On March 18, Gov. Larry Hogan signed into law legislation to suspend collection of the state’s fuel rates for 30 days. The tax holiday took effect immediately and runs through April 16.
Suspending collection of fuel taxes is estimated to cost the state $100 million.
Advocates say the lost revenue would be covered by dipping into the state’s $7.5 billion budget surplus.
The governor has since said it may be necessary to extend the tax holiday beyond the original 30-day time period.
An attempt failed this week to extend the tax holiday through Memorial Day.
In Georgia, a fuel tax holiday was enacted on March 18.
Georgia collects a 29.1-cent gas tax and a 32.6-cent diesel tax.
The suspension of state fuel taxes runs through May 31.
Gov. Brian Kemp said the state is in a good position to provide a tax break because of a $3.7 billion budget surplus through fiscal year 2021.
In Connecticut, a three-month holiday from paying the state’s 25-cent excise tax on gas took effect April 1. The tax holiday does not affect the 41.1-cent excise tax on diesel.
The gas tax holiday runs through the end of the fiscal year – June 30.
Suspension of the gas tax for three months will cost the state $90 million.
IFTA effect
Pursuit at statehouses for fuel tax holidays that would include diesel has the attention of professional drivers. Truckers want to know what a tax break would mean for paying their fuel tax through the International Fuel Tax Agreement.
IFTA Executive Director Carmen Martorana recently told Land Line Media that drivers wouldn’t have to pay state fuel tax if they are buying and burning the fuel in a state that is not collecting the tax.
Martorana pointed out that drivers who buy fuel in a state with a fuel tax exemption and drive in a state without an exemption, drivers would have to pay that tax out of pocket.
He added that if a driver pays taxes on fuel in one state but then drives in a state that has a tax holiday, they can get reimbursed. LL
Land Line Media reporter Ashley Blackford contributed to this report.
More state trends
Keith Goble, state legislative editor for Land Line Media, keeps track of many trends among statehouses across the U.S. Here are some recent articles by him.
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