The Effect of Gas Tax Holidays on Inflation Expectations and Consumption

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Date

2024-04

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Mosbacher Institute for Trade, Economics & Public Policy

Abstract

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The COVID-19 pandemic and the Russia-Ukraine conflict triggered significant supply disruptions and skyrocketing gas prices. By the first half of 2022, the average price of gasoline had risen by over 50%. In response to these escalating prices, several U.S. state governors, alongside the federal government, contemplated temporary suspensions of the gas tax to mitigate the impact of these high prices. A distinctive feature of gas prices is that the price at the pump includes both federal and state-level gas taxes. Any changes in the tax rate are immediately apparent to consumers.

Keywords

Gas Tax Holidays

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