Gas Tax Relief Is Complicated

Easing consumer pain is a good idea, unless it causes more problems.

May 09, 2022

Man Grimaces at the Gas Pump

ALEXANDRIA, Va.—High gas prices and high taxes. That may be the most despised “two-fer” ever. So, the thinking goes, let’s do something about both with one simple action: Enact “gas tax relief.” Whether that’s a good or bad idea, more states are doing just that as gasoline prices continue to hover above $4 per gallon.

Taxes are a significant contributor to gas prices. The national average for gas taxes and fees is about 57 cents per gallon, and diesel fuel taxes are even higher, averaging 64.6 cents per gallon.

Convenience stores, which sell an estimated 80% of the gasoline sold in the country, pay or collect a hefty amount of taxes. In 2021, the industry paid or collected $159 billion in taxes, or 23% of all sales dollars, according to newly released NACS State of the Industry data. On a per-store basis, convenience stores averaged $1.1 million in taxes, which includes property taxes, payroll taxes, sales taxes and taxes that are assessed on a variety of products they sell, including gas.

The goal of gas tax relief is to reduce costs for consumers, an intended result that convenience stores naturally support. When customers spend less money on gas, they are more likely to spend more money elsewhere, including inside the store.

Meanwhile, the day that gas tax relief laws take effect, news crews eagerly visit convenience stores to compare prices. We know because we get calls from reporters. Did Maryland’s prices drop 36 cents? Did Georgia’s prices drop 29 cents? And did prices in Connecticut go down by 25 cents when the new state gas taxes took effect, to name three examples? If not, something’s wrong, right? Unfortunately, it’s not that simple.

Why not? Find out in the latest NACS Convenience Corner blog post “Is Gas Tax Relief a Good Idea?