Suspension of Gas Tax Proposed. Could There be Savings at the Pump?
April 6, 2022
April 6, 2022
Governor Glenn Youngkin has sent legislation to the General Assembly to suspend Virginia’s gas tax for three months. The identical pieces of legislation, SB6001 in the Senate, introduced by Senator Steve Newman (R-Lynchburg), and HB6001 in the House, introduced by Delegate Tara Durant (R-Fredericksburg) would limit to two percent the amount that the statewide tax on motor fuels can be raised annually pursuant to statutorily required indexing, eliminate the statewide motor fuel tax, which is 26.2 cents per gallon for gasoline and 27 cents for diesel, from May 1, 2022, to July 31, 2022, reduce the statewide motor fuel tax by 50 percent from August 1, 2022, to August 31, 2022, and by 25 percent from September 1, 2022, to September 30, 2022. These bills also contain an emergency clause that will require a two-thirds vote in each chamber to pass.
There is no doubt that gas prices are squeezing families’ pocketbooks, however, the proposal does not necessarily equate to the price of gas dropping at the pump or savings to consumers as purported by the Youngkin administration. Based on a new analysis from the Institute on Taxation and Economic Policy, 30% of the projected “savings” from this plan would likely flow to oil producers, rather than fully passed onto motorists. In addition, the trucking industry and out-of-state residents, including tourists, currently account for a large share of fuel consumption in Virginia and would stand to receive substantial benefits from this plan. Less than a third of the benefit from suspending the state gas tax would flow to Virginia residents with incomes below $136,000. The majority would be received by industry or people who don’t live in Virginia. Read the full TCI report, HERE.