Economists say gas tax holiday savings not enough

The bill introduced earlier this month would slash gas taxes by half from 38.5 to 19.25 cents per gallon for 90 days. Natural gas would be reduced from 47 to 23.5 cents per gallon. If passed, the bill would go into effect immediately, aimed at providing relief during the peak summer travel season.

Speaking about the tax, Matthews said that lost revenue to the state was a concern.

“We can’t default on any debt we have as a state, however, once that’s covered, I believe we do need to provide relief to Ohioans at the pump.”

Even as gas prices neared record highs across the state, the reduction would amount to about a $2 savings per fill-up for the average driver, or savings estimated between $50 and $80 over the course of the summer.

Though every dollar counts, opponents say the individual savings aren’t enough to justify the collective hit to the state’s budget.

Economic policy analysts Scioto Analysis surveyed a panel of more than 30 economists working at colleges and universities across the state. A little more than half of the respondents said that such a tax holiday would “provide meaningful financial relief to Ohio residents.”

A majority, 15 of 19, disagreed that, “the long-term economic benefits of a three-month gas tax suspension would outweigh the long-term economic costs of reduced state infrastructure funding.”

The majority also agreed that the benefits would primarily fall on consumers, not fuel retailers. The biggest savings, economists said, would go toward the transportation industry.

“And because fuel usage increases with income, this 'tax relief' would be even smaller for lower-income Ohioans,” said Paul Holmes of Ashland University.

The state’s gas taxes go toward maintaining roads, leading some of the survey respondents to point out that the reduction in investment will lead to other costs at later points. Several even added that the current gas taxes are unable to maintain the state’s struggling infrastructure.

“The end result is a budget shortfall for Ohio roads with only two options: other taxes must be raised to fund the shortfall, or Ohioans put up with worse roads,” said Kevin Egan of the University of Toledo.

Gas prices in Ohio sit at an average of $4.45 per gallon, 6 cents higher than the national average, according to AAA. The numbers are still below the state’s highest recorded average of $5.05 in the summer of 2022 but is nearly 50 cents higher than prices a year ago.