Should Minnesota Suspend The Gas Tax?

Gas prices have risen dramatically over the last few weeks, leading to a conversation on whether Minnesota should suspend its gas tax to temporarily lower the price of gas for consumers.

Minnesota's gas tax is $0.326 per gallon, which puts them right in the middle of the road (pun intended) compared to the rest of the country. Alaska currently has the lowest gas tax at $0.09 per gallon, while California's is highest at $0.596 per gallon. Additionally, the federal gas tax is currently $0.184.

THE ARGUMENT FOR SUSPENDING THE TAX 

This is not the first time the idea of suspending the gas tax- federal, local or both- has been floated. In fact, U.S. Representative Angie Craig proposed suspending the tax in 2022 as the state came out of the pandemic.

"I know that Minnesotans are struggling to keep up with gas prices, and I share their frustration," said Representative Craig on her website in 2022. "In these difficult times, Congress must do all it can to lower costs for working families – especially at the gas pump. That's why, today, I am joining the effort to temporarily suspend the national gas tax and provide some much-needed relief for American consumers."

Suspending the gas tax is a quick, temporary way for people to keep more money in their pockets that could be used to pay bills, keep credit card debt down or just be saved.

Georgia recently passed a 60-day suspension of the state's gas tax, which is currently $0.331 per gallon. It is the fourth time in Governor Brian Kemp's term that the gas tax has been suspended.

THE ARGUMENT AGAINST SUSPENDING THE MINNESOTA GAS TAX 

While Georgia has a budget surplus to help offset the cost of a gas tax holiday, Minnesota's financial outlook isn't quite as rosy. While the 2026-27 biennium promises an expected surplus of $2.47 billion, the next is projected to have a nearly $3 billion deficit.

Before the pandemic, the state gas tax was the number one contributor to the state highway fund. It is now the third-biggest contributor to the fund so removing it would cause a bit of a budget shortfall.