This week, a flurry of resolutions were introduced in the House and Senate proposing 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 sponsors 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 don’t automatically follow. This is because when a required decrease (or increase, for that matter) in the state gas tax takes effect, prices at the pump do not automatically adjust by that amount. In fact, only 18 percent of the change is passed on in the retail price, according to a study by ARTBA.
Again, 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 simply cannot afford a voluntary reduction in transportation revenue. We are already dealing with an involuntary reduction driven by inflation and fuel efficiency. Fuel taxes generate roughly $90 million per month. So the tab can add up quickly.
To their credit, many sponsors of these proposals to suspend the gas tax have said other state revenues could be used to 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.
If South Carolina were to suspend 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 the state to foot the entire bill which gives out-of-state drivers a free ride, leaving SC taxpayers to cover their 30% contribution.
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.
If providing relief from gas prices becomes a top legislative priority, we encourage legislators to consider more tangible, direct ways to deliver relief that SC taxpayers will recognize, such as tax rebates or credits.