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1 Jonathan Williams & Andrew Chamberlain, Temporary Gasoline Tax Holidays: Relief for Motorists or Poor Tax Policy 1 (2006)

handle is hein.taxfoundation/ffgbxz0001 and id is 1 raw text is: r:OuU NDAT10N. July 6, 2006 Temporary Gasoline Tax Holidays: Relief for Motorists or Poor Tax Policy? by Jonathan Williams and Andrew Chamberlain Fiscal Fact No. 61 As gas prices have risen in recent years, gasoline tax holidays have grown in popularity with lawmakers as a means of temporarily lowering retail gas prices for consumers. The phrase tax holiday generally describes any temporary repeal of a tax-in this case, any temporary repeal of local, state or federal sales or excise taxes on gasoline. The most recent experiment with gas tax holidays was in the State of Georgia, when lawmakers temporarily repealed the state's portion of the sales and excise taxes on gas during the period of abnormally high gas prices in the wake of Hurricane Katrina in 2005. Since 2000, three other states have also enacted gas tax holidays (see Table 1), and 41 states and the District of Columbia have considered or enacted similar proposals to suspend, cap, or otherwise freeze gasoline taxes. Table 1. States Enacting Temporary Gas Tax Holidays Since 2000 .S tate ........... E ffectiv e iD aes D........ . .escriptio n .......................................................................................... :Suspended state's 7.5 cents-per-gallon excise tax and 4:: Georgia September 2005 percent sales tax on gasoline. :Suspended 8 cents of the state's 14.3 cents-per-gallon :Florida August 2004 :excise tax on gasoline. July-December :Suspended the state's portion of the sales tax on .. . . . . . ....... .o ... . . . . . .. . . . . . .. . . . . ................................ . ........................................................................... ,Indiana .July-October 2000 :Suspended the state's sales tax on gasoline (5 percent). Source: State Tax Notes; Tax Foundation While gas tax holidays are popular with lawmakers, they are generally poor economic policy. Tax holidays appear to provide a simple way to offer tax relief to consumers during times of high prices at the pump. However, not all forms of tax relief are created equal.