Maryland state gas tax holiday would be too costly

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Some Maryland legislators have proposed that the state stop collecting gas taxes for 30 days in light of the increased gas prices caused by the war in Iran. Every time we fill up our tanks, we feel the sting of those taxes. Yet on reflection, a gas tax holiday would be a mistake.

The 2022 30-day pause in gas tax collection, in response to the Ukraine war, cost the state $100 million. Because of inflation, today’s gas tax is higher than it was in 2022, meaning a similar tax holiday would likely cost even more in 2026. Given budgetary constraints, Maryland would almost certainly have to make that money up, either by increasing other taxes or reducing spending. In other words, reducing the gas tax would not eliminate the pain but simply shift it elsewhere.

The gas tax is a major source of funds for the Maryland Transportation Trust Fund, which uses its resources for a variety of purposes. Some of the money pays debt service. Cutting that isn’t going to happen because it could mean breaching contracts and impairing the marketability of Maryland’s debt in the future. Some Trust Fund money goes to transportation operating expenses. If that were to be cut, Marylanders would presumably see reduced services. Some goes to capital expenditures, such as safety improvements on highways and bridges. Delaying those could put lives in danger.

There’s another reason to leave the gas tax alone: Economics 101 teaches that lower prices increase demand. If Maryland reduces its gas tax, Marylanders are likely to respond at the margin by buying more gas than they otherwise would. The war effort would be aided by reducing gas purchases, not increasing them.

And what would happen if gas prices did not drop in thirty days? Would we extend the gas tax holiday and worsen the budgetary problems?

The gas price spike in the United States caused by the war is a national problem driven by global events. Any solution should be a national solution, rather than a temporary solution. Maryland should leave its gas tax in place.

Editorial Advisory Board Members Arthur F. Fergenson and Debra G. Schubert did not participate in this opinion.

EDITORIAL ADVISORY BOARD MEMBERS

James B. Astrachan, Chair

Gary E. Bair

Jill P. Carter

Arthur F. Fergenson

Nancy Forster

Susan Francis

Julie C. Janofsky

Ericka N. King

George Liebmann

George Nilson

Steven I. Platt

Angela W. Russell

Debra G. Schubert

Jeff Sovern

H. Mark Stichel

The Daily Record Editorial Advisory Board is composed of members of the legal profession who serve voluntarily and are independent of The Daily Record. Through their ongoing exchange of views, members of the board attempt to develop consensus on issues of importance to the bench, bar and public. When their minds meet, unsigned opinions will result. When they differ, or if a conflict exists, majority views and the names of members who do not participate will appear. Members of the community are invited to contribute letters to the editor and/or columns about opinions expressed by the Editorial Advisory Board.