Gas Tax Holidays: “Popular, but Bad”

Photo by Erik Mclean on Unsplash


In FY 2021, Motor Fuels Tax revenue was 26.5 percent of the total revenue deposited in the Special Transportation Fund, down from 45.0 percent in FY 2010. The Sales and Use Tax has overtaken the Motor Fuels Tax to become the largest single revenue component in the Special Transportation Fund; in FY 2021 it represented 26.9 percent of total collections.

Source: CT OPM
Source: S&P Global Ratings


Results suggest that the benefits of fuel tax holidays are likely to accrue to consumers during under normal market conditions, but are likely to be shared by consumers and producers during times at which supply chain constraints exist.

Consumers are unlikely to reap the full benefit of fuel tax moratoria.

Source: US EIA



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