Gas tax cuts reward the wrong drivers

Uber and Amazon Flex drivers protest the fuel price serge and demand more money outside an Amazon warehouse in Redondo Beach, California, U.S., March 16, 2022. REUTERS/Mike Blake

NEW YORK, March 25 (Reuters Breakingviews) - The price of gas is now nearly $6 a gallon in California, or 80% higher than it was a year ago. Governor Gavin Newsom is proposing giving residents $400 per car, with a limit of two. He’s not alone, as lawmakers in multiple states are considering suspending fuel taxes or sending gas stimulus checks. They are lining the wrong pockets.

The richest quintile of the population spend over three times as much on fuel as the lowest 20%, according to the Energy Information Administration. Poorer households spend a greater chunk of their income on gas, and therefore are more likely to cut back on necessities. Writing checks, then, is slightly more equitable than trimming taxes, which favors those who use more gas.

But in general such subsidies reward those with multiple gas guzzlers, which reduces the relative appeal of electric cars, mass transit or biking. The best long-run solution to high gas prices would be a revamp of the transportation system. Shelling out state cash to prop up the use of the combustion engine works against that goal. (By Robert Cyran)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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