We have heard a lot this week about temporary suspensions of South Carolina’s gas tax to ease pain at the pump as fuel prices climb.
To be very clear, we don’t doubt the sincerity of these proposals and the intent of their supporters to offer relief. The pain at the pump is real. However, suspending user fees to offset rising costs may seem like a way to dull that pain, but it is a political placebo that will ultimately lead to setbacks and higher costs in the future.
For starters, gas tax suspensions have a track record of underdelivering on the very “relief” they promise.
When the gas tax changes, prices do not automatically follow – nor are they required to. When a required decrease (or increase, for that matter) in the state gas tax takes effect, there is little to no impact on the price at the pump. In fact, only 18 percent of the change is passed on in the retail price within the first two weeks, according to an ARTBA study.
Therefore, if South Carolina suspended the gas tax, most drivers would save less than $5 over 30 days. These savings will come at the cost of delaying road and bridge projects, or of leaving state taxpayers to foot the entire bill while giving out-of-state drivers a free ride.
We understand people want cheaper gas. They also want smoother roads, better bridges, and less time stuck in traffic. Cutting off funding (even for a short time) undercuts all three.
The truth is, South Carolina cannot afford a voluntary reduction in transportation revenue. We are already dealing with an involuntary reduction driven by inflation and fuel efficiency.
To their credit, many supporters of these proposals to suspend the gas tax have said other state revenues could backfill SCDOT for the lost revenue. However, that backfill isn’t guaranteed, and even if it were, it still comes with uncertainty about when those dollars would come in. Not to mention, fuel taxes generate roughly $90 million per month, so this tab could add up quickly depending on how long a suspension lasts.
If providing relief from gas prices becomes a legislative priority, we encourage legislators to consider more tangible, direct ways to help South Carolinians.
Once you open the door to suspending the state’s primary transportation funding source, it will face political pressure every time gas prices rise. That may be the most costly consequence of all.