Will there be a gas tax holiday? What one would mean for North Carolina drivers

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High gas prices continue to put a squeeze on many Americans, including North Carolina drivers, leading some to call for a “gas tax holiday” to provide some relief at the pump.

The national average for a gallon of regular gas sat at $4.940 as of Thursday, according to AAA, with North Carolina’s average a slightly lower $4.580.

President Joe Biden has called for a three-month federal gas tax holiday, and some have called for North Carolina to also suspend its state gas tax. But that doesn’t mean either suspension will happen.

Here’s what to know about the gas tax situation in North Carolina and what changes may be made in light of rising gas prices:

What’s a gas tax? What is the federal gas tax in the US?

Gas taxes are “taxes levied on gasoline, diesel, and gasohol (a mixture of ethanol and unleaded gasoline),” according to the Urban Institute, a nonprofit research organization. Revenue from gas taxes typically go towards transportation-related costs, such as highway maintenance.

At the federal level, the current gas tax rate is 18.3 cents per gallon for regular gas and 23.4 cents per gallon for diesel.

Does North Carolina have a gas tax?

In addition to the federal gas tax, North Carolina also has its own gas tax, which is currently 38.5 cents per gallon, according to the state Department of Revenue.

That means that folks filling up in North Carolina pay 56.8 cents in total gas taxes on each gallon of regular gas and 61.9 cents per gallon of diesel.

Gas tax funds account for about half of the North Carolina Department of Transportation’s state revenue every year, the News & Observer reported previously.

Will gas taxes be suspended?

Biden on Wednesday called for Congress to enact a “gas tax holiday” by suspending the federal gas tax for three months.

But, political experts say, the odds of that happening are relatively low, especially considering there’s opposition to the idea among congressional Democrats.

The president also called on states to enact similar suspensions on their state-level gas taxes in his Wednesday statement, and similar calls have already been made in North Carolina.

Debate is ongoing over whether that’s feasible among state legislators, with some calling for rebates and others looking to make longer-term tax cuts.

How much money would a suspended gas tax save North Carolina drivers?

NCDOT “estimates the average North Carolina driver currently travels 12,000 miles annually in a vehicle that burns one gallon of motor fuel every 22 miles.”

That means the average North Carolina driver pays $4.04 a week in gas taxes, which adds up to about $210 in gas taxes a year.

What are the potential side effects of a gas tax holiday?

Those pushing for gas tax holidays say they will help drive down the prices of common goods since they’ll be less expensive to transport in addition to saving drivers money at the pump, but others caution there could also be consequences.

“A gas tax suspension would result in construction and maintenance project delays,” NCDOT spokesman Jamie Kritzer previously told the News & Observer. “Grass mowing, litter pickup, pothole patching and other operations that are less essential or not directly related to safety would also be impacted in ways similar to what we saw when COVID-19 impacted the motor fuel tax due to lower traffic volumes in 2020.”