Gas tax holiday

Presidential hopefuls John McCain and Hillary Clinton both championed this proposal.[3] The two political opponents purported this to be a short-term fix for gas prices that were set to hit $4 a gallon in the summer of 2008. With economic woes topping the American peoples' list of concerns,[4] this became a hotly debated issue in the 2008 U.S. Presidential Election.

The proposal met criticism from a wide array of news sources, politicians, the vast majority of economists, and the Bush administration.[3][5][6]

Economic theory is very clear that the incidence of a consumption tax (who is expected to pay the tax) is inconsequential. Even if it were to lower the cost paid by the consumer, it would just result in a spike in demand during the period it was in effect with rising prices in response.[2]

Barack Obama was perhaps the most visibly vocal critic of the measure.[1] He and other critics of the proposal have exclaimed that the holiday would be nothing more than a "short-term, quick-fix" that would not solve the nation's current and long-term problems of high oil prices and foreign oil dependency. Critics have nearly unanimously denounced the scheme as nothing more than pandering for votes in the Indiana and North Carolina primaries.

Since fuel tax is collected from retailers and given the fixed supply and high demand for gasoline, it is argued that it would be unlikely that retailers would pass that savings on to consumers at the pump. Furthermore, State highway officials claimed the move could eliminate nearly 300,000 jobs over the summer months[1] due to nearly $9 billion in lost revenue that would be incurred if some other source of revenue is not found. Hillary Clinton proposed levying a new tax on oil company profits in order to make up for it. However, both the Clinton and McCain proposals would most likely never be passed due to the overwhelming opposition of congressional leaders.

In January, 2022, Florida governor Ron DeSantis proposed a $1 billion gas tax holiday to counter inflation. The proposed policy would have taken place between July 1, 2022, through November 30, 2022.[7] The final legislation resulted instead in a one-month gas tax holiday for October, 2022.[8] Other states, including New York, Georgia, Connecticut and Maryland, have suspended state gasoline taxes in 2022.[9] Despite the drop in taxes, fuel costs actually rose by the end of the relief than they were priced at the beginning without-relief.

In June, 2022, President Joe Biden revived the idea of a federal gas tax holiday in the midst of a surge in inflation, including rising gasoline prices.[10] However, there was enough opposition in Congress that the proposal appeared unlikely to gain enough votes to pass.[9]

• Fuel taxes in the United States