Nationwide inflation is here and no sector of the economy is immune to it. The US Consumer Price Index increased by 0.9% in June, the largest one-month increase in 13 years. Over the past year, prices are now up 5.4%.
Compared to June 2020, food is up 2.4%, apparel is up 5%, and home utilities are up over 20%.
But nowhere is the price jump more pronounced than the price of gas. The gasoline price index has risen 45.1 percent since last year.
The average price of a gallon of gas in Pennsylvania is currently $3.22 compared to $2.44 this time last year.
This price is compounded by Pennsylvania’s sky-high state tax. According to World Population Review, PA currently has the highest gas tax in the nation at about 58 cents per gallon.
The confluence of inflation across PA’s economy is hitting the wallets of hardworking Pennsylvanians hard and I believe the General Assembly must take action.
To alleviate this hardship, I am proposing a gas tax holiday that would temporarily lower the gas tax by 26% (15 cents per gallon) for a period of six months. My bill, SB 813, has been officially introduced and referred to the Transportation Committee. I look forward to its swift consideration and passage once the Senate reconvenes in September.
Some are of the opinion that the benefit of a six-month gas tax cut would not be passed on to consumers because the tax is “indirect” and not imposed at the point of sale.
I disagree with this assertion. In a free market with open competition, fuel wholesalers still must compete with one another for the business of retailers such as Sheetz and Wawa.
Additionally, the consumer demand for gas varies with price. This means that it is in the wholesalers’ best interest to allow the price of a gallon of gas to drop at least temporarily. A distributor ultimately receives greater profits by selling greater quantities of gas.
Just as the incremental gas tax hike known as Act 89 has led to higher prices for consumers, I believe that a tax decrease will have the effect of saving consumers money when they go to fill up their vehicle.
The six-month gas tax holiday will also stimulate our economy by lowering the cost of travel. I have heard from a significant number of constituents living paycheck to paycheck who have temporarily put off their plans for road trips to other parts of our state because of exorbitant gas prices.
SB 813 will also ensure that the motor license fund does not lose the necessary revenue to improve Pennsylvania’s roads and bridges.
My bill will include a one-time fee on electric and hybrid vehicles in the state. Those who own these types of vehicles do not feel the full effects of a high gas tax but are still able to benefit from the roads and bridges funded by that tax. I believe it be perfectly logical to ask these owners to pay their fair share through an increase in registration fees.
While the gas tax holiday bill will provide temporary relief to our citizens, I am hopeful that it will also serve as a useful pilot for a possible long-term phase-out of the PA gas tax.
Senator Doug Mastriano represents the 33rd Senate District, which includes all of Adams County, and portions of Franklin, Cumberland and York counties.