The Republicans in the West Virginia Legislature are right. A gas tax pause is not a good idea.
Democratic lawmakers have their hearts in the right place. A lot of West Virginians are struggling right now. Prices for everything are skyrocketing, and watching gas prices top $4 a gallon triggers a societal PTSD from the Great Recession. But pausing the gas tax is not the best way to help people.
First of all, suspending taxes at the pump will only save drivers $5 to $10 per fill-up. Don’t get us wrong — every penny counts — but that’s not going to make a world of difference. GOP lawmakers also make a valid point that the pause isn’t guaranteed to lower gas prices. The taxes on gasoline, unlike virtually every other product in America, are incorporated into the list price, not calculated after the fact. So even if the Legislature suspends the gas tax, retailers may not lower their prices, choosing to pocket the difference instead of passing the savings on to consumers.
Conservative legislators are also right to be concerned that the sudden drop in tax revenue for the state road fund could jeopardize federal infrastructure dollars. West Virginia is in desperate need of road and bridge repair and maintenance; matching federal funds will be essential to getting that work done.
In addition, the price of crude oil, which is refined into gasoline, is already dropping as oil-producing nations increase production and/or tap into reserves. (Biden has already announced that America will release some of its strategic reserves.) It might take a little bit, but that declining cost will be reflected at the pump, and drivers will feel some relief. Plus, the pause only benefits people who drive, even though everyone is struggling.
So we’d like to propose an alternate plan to help West Virginians: Send a $100 pre-paid gift card to every West Virginia resident.
Similar to the $100 incentive Gov. Jim Justice announced to encourage young people to get the COVID vaccine, Justice and/or the Legislature could tap into the $600 million in surplus or the nearly $1 billion in rainy day funds to send every West Virginian a pre-paid Visa card that can be used virtually anywhere except online.
When we say everyone, we mean everyone, regardless of age. A family of four can easily spend more than $300 a week on groceries, so having $100 for every member of the family could help pay for a week or more of food and other necessities, such as gas. By sending a pre-paid gift card rather than a check, the Legislature can greatly increase the likelihood the money is spent at a physical location in-state, boosting the local economy.
Using the larger estimate of 1.8 million West Virginia residents (though the last census puts us closer to 1.7 million), we calculate it would cost $180 million to execute this plan. Though this is a much larger number than Democrats estimated $35 million gas tax cost, taking this route wouldn’t interfere with tax revenues and the cost is still less than a third of West Virginia’s surplus and less than 20% of the rainy day fund. Plus, the state would make back at least part of that balance as taxes collected on the goods on which the gift card is spent.
West Virginia Democrats are right to want to ease some of the financial burden residents face right now, but Republicans are right that pausing the gas tax is not the solution. Both parties should band together to do something that will actually help the most people. As such, we hope they give consideration to our suggestion to give every West Virginia resident a $100 pre-paid Visa card to help get through this financially stressful time.
