We’ll Miss Gas Taxes When They’re Gone

The sharp rise in gasoline prices caused by the Iran war has led to bipartisan calls, and in some cases action, to reduce US gas taxes. At least three Republican-run states have declared gas-tax holidays, and three Democratic US senators have introduced legislation to suspend the federal gas tax until October. Several European countries have reduced fuel taxes as well.

These moves, while understandable politically, reduce government revenue and actually worsen the global oil crisis by exacerbating the supply-demand imbalances that are causing the price increases in the first place. Many consumers seem to be turning to a more permanent solution, with the crisis already delivering a big boost to global electric-vehicle sales. And all of this — the temporary reductions in gasoline taxes and the permanent reductions in gasoline demand from EV sales — raises questions about what will replace what has long been the leading means of paying for transportation infrastructure in the US and much of the world.