Mar 30, 2022 - Business

Gov. Hutchinson doesn't plan to lower gas tax

State gas taxes
Data: Federation of Tax Administrators; Map: Baidi Wang/Axios

As gas prices continue to hover near record highs, governors across the U.S. are moving to suspend state gas taxes to give drivers a break.

  • Yes, but: Gov. Asa Hutchinson has no plan to temporarily lower Arkansas' 24.8 cent-per-gallon gas tax.

State of play: "The approach Arkansas has adopted is lowering the overall tax rate to help citizens with higher gas prices and inflationary pressures," Hutchinson said in a statement to Axios. "In December 2021, the legislature passed two bills providing approximately $500 million in annual tax relief for Arkansans."

  • Yes, but: The tax relief won't be fully realized until 2025. On Jan. 1, the personal income tax rate dropped from 5.9% to 5.5%. Other cuts will follow in the coming years.
  • Hutchinson did not join other governors in a recent demand that Congress suspend the 18-cent federal gas tax for the rest of the year.

Why it matters: Gas prices hit all-time highs nationally earlier this month and will likely continue to climb with the fuel industry disruptions related to Russia's invasion of Ukraine.

  • The average per gallon in Arkansas was $3.81 Tuesday, according to AAA.
  • The highest price on record in Arkansas was $3.97 in 2008.

The big picture: At least five states are considering legislation to cut or suspend state gas taxes, Axios' Shawna Chen reports.

Context: Revenue collected from gas and diesel taxes supports the Arkansas Department of Transportation, road construction and repair.

  • Arkansas has the 15th lowest state tax rate on fuel, but has the highest rate among all its neighboring states.
  • The state collected more than $572 million in gas taxes during fiscal 2021, which ended June 30.

What they're saying: Sen. John Boozman is using gas prices to encourage the continued construction of the Keystone XL pipeline and Rep. Steve Womack recently told Axios the U.S. should do more to tap into its "abundant supplies of energy."

See an interactive version of the map above.


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