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A gas tax holiday may not lead to savings for Virginia drivers

Robyn Crozier, of Australia, pumps gas into her tank at a local Shell station Friday, June 13, 2008, in Scottsdale, Ariz. The price of gas continues to soar in Arizona as Crozier paid $4.23 per gallon for unleaded regular. (AP Photo/Ross D. Franklin)
Ross D. Franklin
A driver fills up on gas.

Lawmakers will be returning to Richmond next week for a special session. And, one of the things they'll be considering is a gas tax holiday.

Governor Glenn Youngkin is proposing a three-month gas tax holiday; temporarily suspending the state gas tax to help people as prices continue to rise at the pump. But a significant portion of those savings will not be passed on to Virginians.

Chris Wodicka at the Commonwealth Institute says it's more complicated than that.

"If we get rid of the state retail gas tax, which is around 26 cents per gallon, the price of gas would not automatically go down by 26 cents per gallon," Wodicka says. "And so that difference would effectively go to oil companies for them to add to their bottom line."

About a third of the savings will go to the oil industry, according to research into how this worked when Indiana and Illinois had a gas tax holiday. But that doesn't mean Virginians will see the rest of the savings. Carl Davis at the Institute on Taxation and Economic Policy says a quarter of the savings will go to out-of-state drivers.

"A significant slice of Virginia's gas tax isn't paid by Virginians in the first place," explains Davis. "It's paid by tourists headed down to Williamsburg and Virginia Beach. It's paid by truckers headed up and down I-81, passing along their higher transportation costs to, in many cases, out-of-state residents."

Lawmakers will be debating this proposal, and trying to reconcile budget differences between House Republicans and Senate Democrats, during a special session next week.

This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.

Michael Pope is an author and journalist who lives in Old Town Alexandria.