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Georgia, Maryland implement gas tax holidays to bring relief at the pump

Gas Prices
Posted at 12:33 PM, Mar 25, 2022

Lawmakers in both Georgia and Maryland passed state gas tax holidays in the last week that will temporarily suspend state taxes on gasoline, providing relief for millions of drivers.

In recent weeks, gas prices have been the highest they've been in U.S. history. According to AAA, the national average cost for a gallon of gasoline on Friday was a whopping $4.23.

Gas in Georgia is about five cents less than the national average, but motor vehicle owners could see themselves saving as much as 29 cents per gallon in the days ahead. Anyone with a car with a 10-gallon gas tank will save about $3 every time they fill up.

There's even better news in Maryland — a 30-day suspension of the state gas tax, which could save drivers as much as 36 cents per gallon.

A year ago, the price of a regular gallon of gas was a comforting $2.88. But raging inflation and war in Ukraine have seen prices almost double in states like California. The result has been punishment at the pump.

The desire to pass savings on gas to residents has been a bipartisan effort in Georgia. Lawmakers in both chambers of the general assembly approved House Bill 304 without opposition.

"Today, I signed HB-304 to temporarily halt collection of the state gas tax and ease the burden. Consumers are feeling at the pump," Georgia Gov. Brian Kemp said.

Some economists and energy experts express concerns that there is no guarantee customers will see any savings, as the legislation does not force gas companies to pass the savings on to drivers.

At the federal level Sen. Raphael Warnock, D-Georgia, has proposed waiving the federal gas tax that would last through the rest of the year.

In theory, if lawmakers suspend the federal gas tax, it would provide savings of about 18 cents to consumers at the pump. Although it may provide temporary relief, consumers in Georgia, to quote English folklore, are essentially robbing Peter to pay Paul.

A report published by the University of Pennsylvania on the effects of a federal gas tax holiday estimated that consumers would result in around only $50 in savings, based on current gas prices.

"Suspending the federal gas tax from March to December 2022 would lower average gasoline spending per capita between $16 and $47," the report said.

But the short-term savings would come at a cost. The study found that suspending the tax would lower federal tax revenue by about $20 billion over that period.

For Georgia, suspending collections could cost the state up to $400 million that could be used for infrastructure and transportation projects. But with gas prices showing no signs of falling, customers are ready to try something new.

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