One day there will be a book on the ups and downs of state gas taxes and infrastructure finance—with a whole chapter dedicated to what is unfolding during the inflation surge of 2021 and 2022. No matter its good intentions, the so-far limited support for gas tax suspensions today will be seen as foolish political gestures that actually will speed up the damage inflation inflicts by eroding the value and scope of what can be built. Briefly choking off those taxes, which essentially are deposits into a road-and-bridge upgrade savings account, will only make a bad situation worse with negligible benefit to taxpayers.
There are other reasons why gas tax holidays are a bad idea—and why the current interest in them is likely to die. First, not all of the gas tax suspension makes its way into the pockets of drivers. Nothing prevents gas stations from setting prices as they see fit rather than immediately cutting the cost at the pump equal to the tax amount, notes the American Road and Transportation Builders Association. Drivers also may have a hard time perceiving the price drop because they will never know if it was caused by the tax holiday or another oil market gyration.