Gas prices across Maryland have hovered about 35 cents to 40 cents below the national average for the past month because of a 30-day holiday on collection of the state fuel tax — but with the tax break in effect only through 11:59 p.m. Saturday, they are set to jump well above $4 a gallon Sunday.
That will come as a shock to many drivers who have appreciated the savings as they struggle with rising pocketbook pressures. The tax holiday will end just days after an economic report confirmed that inflation is rising more sharply than it has since 1981, in large part because of the surging cost of fuel.
“I’m a single mom, so it’s really been affecting me badly,” said Ayanna Martin, a 27-year-old Towson University student who works as a call center agent. On Wednesday she put $10 worth of $3.90-a-gallon gas into her tank, just enough to make it through the week.
“This is all I have for the next couple of days, until I get paid on Friday,” Martin said. “I’m just trying to budget. Just trying to survive, basically.”
State lawmakers paused collection of the state’s 36-cent-per-gallon gas tax and 37-cent-per-gallon diesel tax in March in response to fuel prices that surged to record highs around the country after Russia attacked Ukraine.
Economic sanctions imposed on Russia in response to the invasion have had wide-reaching effects on food and energy markets, including limiting the significant supply of crude oil exported from that country. At the same time, inflation has been rapidly accelerating for the first time in four decades because of surging demand, as the U.S. and global economies have recovered unexpectedly quickly from the coronavirus-induced recession that began in the spring of 2020.
Nationally, gas prices hit an all-time high average of $4.33 on March 11, while Maryland prices hit a peak of $4.31 that same day, according to the automotive group AAA. As of Friday, the national average price for a gallon of regular gas was $4.07, 42% higher than a year earlier. In Maryland, the average was $3.68, a third higher than a year ago.
Rising fuel prices are a significant driver of the broader inflation in the economy. They have led to higher transportation costs for the shipment of goods across the economy, which, in turn, has contributed to higher prices for consumers.
In response, discussions over gas taxes and measures to reduce financial burdens on consumers and businesses have swirled in state capitals around the country for the past month. The same day Maryland enacted its gas tax holiday, Georgia also did so, extending its policy through May. Weeks later, Connecticut approved a gas tax holiday from April through June.
At least a dozen states — among them California, Kansas, Maine and Minnesota — have meanwhile proposed sending rebate checks of several hundred dollars directly to taxpayers to ease rising costs of fuel and other products.
Along with the gas tax holiday, Maryland passed nearly $2 billion in tax relief for retirees and for parents of young children in the annual legislative session that ended Monday. That became practical and popular when, as lawmakers were preparing the state budget for the fiscal year that begins July 1, the comptroller’s office projected a more than $7 billion state operating budget surplus.
Late in the session, there were calls to extend Maryland’s gas tax holiday as consumers and businesses continued to struggle with rising costs. The gas tax suspension amounted to about $4 in savings to fill a typical car’s tank.
Republicans in the state House of Delegates proposed continuing it an additional 45 days through an amendment offered last week to an unrelated bill. Comptroller Peter Franchot, a Democrat whose office is in charge of collecting taxes and who is running for governor, also endorsed an extension.
“Though we know this is short-term relief, it’s necessary relief,” said Del. Brenda Thiam, a Washington County Republican.
But House Democrats argued against extending the holiday, saying it could have a significant impact on the state’s ability to build and fix roads, bridges and transit systems.
The gas tax is the main source of income for the state’s transportation trust fund, an account used to pay for road and transit projects. The tax holiday bill that passed the legislature in March included a mechanism to send money from the state operating budget surplus into the transportation fund to cover the nearly $100 million in expected gas tax revenue the state was expected to forgo.
The proposal to extend the tax holiday further didn’t include such a mechanism, and Democrats said that’s why they voted it down.
Theo Norris, a 63-year-old resident of Cross Keys in North Baltimore, said the temporary nature of the gas-tax holiday meant it wasn’t much help. The prices will go back up just as people continue to struggle with inflation, she said.
“Everything has just gotten astronomically, outrageously ridiculous,” Norris said.
For Earl Smith, 69, of the Anneslie neighborhood in Towson, the discussion about the gas tax holiday “brought to light the fact that we’re overtaxed.”
While the gas-tax moratorium has saved him money, “I wouldn’t say, ‘Let’s go out and have a Ruth’s Chris steak dinner on it,” Smith said as he filled up at a gas station on York Road.
Gas station owners will be forced to add to that pain early Sunday.
They will be required to report to the comptroller’s office the amount of fuel they have on hand when the tax holiday ends and pay the state the 36-cent tax on each gallon. That means prices are expected to rise as immediately as they dropped back on March 18, said Kirk McCauley, director of member and government relations for the Washington, Maryland, Delaware Service Station and Automotive Repair Association.
“They’re going to add 36 cents back into the price of gasoline,” McCauley said. “That’s all they can do.”
The Associated Press contributed to this article.
