The Sconi

Record breaking levels of inflation and soaring gas taxes are leading many Democratic governors across the nation to consider suspending their state's federal gas tax in order to provide relief to U.S. consumers, but analysts warn that this short-term fix could actually make matters worse in the long run.

According to The IGEN Blog, the current federal fuel tax rates are .184 cents per gallon for gasoline and .244 cents per gallon for diesel. Wisconsin's state gas tax is $0.309 per gallon.

On March 8, Wisconsin Gov. Tony Evers joined five other democratic governors who urged Congress to suspend the federal gas tax, according to WBAY News. The Gas Prices Relief Act of 2022 would suspend the 18.4 cent federal gas tax until Jan. 1, 2023. Wisconsin leaders have yet to push the suspension of the state gas tax.

Maya MacGuineas, an opinion contributor for The Hill and president of the bipartisan Committee for a Responsible Federal Budget, emphasized the dangers of a federal gas tax suspension as a quick fix for high pump prices proposed by many Democratic policymakers. Among many risks, she said, a gas tax holiday will amplify the climate crisis and slow the development and adoption of cleaner technologies.

"A gas tax holiday would exacerbate inflationary pressures and slow a needed transition to more energy-efficient and climate-friendly technologies, while cutting off a key source of infrastructure funding," MacGuineas said. "It’s a way for politicians to pretend they are making the situation better, when in fact they are making it worse."

MacGuineas predicts that once the gas tax holiday ends, inflation would be worse. 

"Rather than countering the highest inflation rates seen in decades, suspending the gas tax in an overstimulated economy would boost inflation in 2023, as surging demand coincides with reimposition of the tax," she said. "Remember it was excessive tax cuts and spending that helped get us into this inflation mess. They aren’t going to get us out of it."

The federal gas tax currently helps fund highway and transit spending through the Highway Trust Fund. Ridding the economy of this would defund our infrastructure and worsen our nation’s "already precarious fiscal situation," the op-ed states. MacGuineas said the "Committee for a Responsible Federal Budget estimates that suspending the gas tax through the end of the year would reduce that revenue by roughly $20 billion, nearly halving the trust fund’s revenue for the year."

According to CNET, gas taxes already fail to keep up with rising infrastructure costs, a problem exacerbated by the rising popularity of electric vehicles. Some economists warn that a gas tax holiday will make the problem worse and fail to address issues involving the oil supply.