Missouri House lawmakers consider pausing gas tax

JEFFERSON CITY, Mo. (KMIZ)

As gas prices tick higher and higher nationwide, lawmakers in Missouri are considering cutting a state tax to save drivers money at the pump.

The Missouri House Special Committee on Government Oversight heard two nearly identical bills from Rep. Travis Fitzwater (R-Holts Summit) and Rep. Adam Schwadron (R-St. Charles) that propose a six-month state gas tax holiday. House Bills 2801 and 2813 will likely be voted on by the committee next week. Both bills include an emergency clause that would allow the holiday to go into effect immediately after the governor signs them if passed.

Gas tax holiday

Missouri's new state gas tax went into effect in October 2021 at 19.5 cents and is scheduled to be raised another 2.5 cents in July of this year to make it 22 cents.

Fitzwater said the goal of the holiday is to provide relief for the average Missourian.

"Missourians are struggling under the weight of an interesting situation with inflation and increasing costs of gas, so I think the intent behind it is really important, and that's to give Missourians relief," Fitzwater said.

Although Fitzwater admits the effects of the tax holiday may not be immediate.

"There's some process to this too that I think is important to understand, you don't just give the gas tax holiday and then all of a sudden it's implemented and gas prices go down 20 cents, that's just not how it's going to be, there'd be I think some other dynamics that would have to be worked through," Fitzwater said.

At the committee hearing, lawmakers were supportive of the idea, but no one showed up to testify in favor of the bills. However, several spokespeople came forward to testify against the bill, concerned it may hurt their industries.

State tax's effect on drivers

AAA spokesperson Nick Chabarria said Missouri has one of the smallest state gas taxes in the country, coming in at the sixth smallest.

Chabarria explained the gas tax is only a small part of what goes into the prices people see at the pump. The 19.5 cent tax is only 15% of the price; the largest part of the price is crude oil at 50-60%.

Because crude oil is subject to so much change, Chabarria said the tax holiday may not lead to obvious savings.

"There really is no guarantee that drivers would see savings," Chabarria said. "It's a global market. So there's nothing to say that if the bill passed, and there was a gas tax holiday, that there wouldn't be something that would, you know, shoot crude oil up again, which would increase gas prices, some more."

Loss in state and federal revenue

Eric Schrader, Missouri Department of Transportation assistant chief engineer, said the tax holiday could lead to a reduction of $326 million in state money that goes to MoDOT and matches federal money on a three-to-one basis. So, the total loss in MoDOT revenue would be between $978 million and $1.3 billion.

"So that requires taking projects out of the capital plan to make sure we've maintained fiscally constrained and a direct impact in that matter," Schrader said.

Fitzwater suggests making up for the lost revenue by pulling from the state's general revenue.

"We have billions of dollars as a state in cash, not only from the federal government but from general revenue, we're hitting record numbers for general revenue right now even for this year," Fitzwater said. "And so, as you hear testimony against this which will surely come, and they say we're going to lose billions of dollars, well we can plug holes with general revenue."