NH Set To Suspend 22.2-Cent Gas Tax Putting Pressure On MA

CONCORD, NH — As consumers continue to get hammered by exorbitantly high gasoline prices, leaders around the country, including in both Massachusetts and New Hampshire, have floated gas tax holidays.

But implementing them is sometimes easier said than done.

Gas prices in some parts of the country have more than doubled in less than 18 months. While the recent spikes during the past few weeks were due primarily to how market forces are reacting to Russia invading Ukraine, gas prices were rising months before, and are one of the primary reasons for the very high inflation rate that is affecting every part of the economy.

Nearly half of the governors and legislatures in the United States, including New England states, are eyeing gas tax holidays to give consumers at least a small break.

New Hampshire officials have been kicking around the idea of a temporary decrease of the 22.2-cent tax during the three biggest months for collections — the summer tourism season. The state expected to raise nearly $32 million in gas tax revenue between July and September. About half of the revenue comes from out-of-staters, mostly Massachusetts. Bay State residents make up the largest percentage of visitors who vacation in the state, NH Travel and Tourism Director Lori Harnois said.

Despite a Republican majority in both the House and Senate, the gas tax holiday idea has not been approved, despite the perceived need, which is frustrating Gov. Chris Sununu. He cannot sign an executive order to temporarily freeze the gas tax, although he would if it were an option.

“I wish,” he said Tuesday. “It has a financial implication, so the Legislature really has to do it … I would sign that executive order today if I could. Everyone wants to see it. Washington won’t do it so New Hampshire should. It’s really that simple.”

Sununu said the state’s surplus allowed officials to consider a temporary reduction. He was not in complete agreement that it should wait until the summer months though. Sununu was also not impressed with the idea vehicle registrations should be lowered by $25 either, another idea being floated. While the state had spent a lot of money on tourism promotion, including millions in 2021, which led to higher-than-expected post-pandemic visits, Sununu said residents needed gas price relief immediately.

“I’d rather have them pass something today and let it come in for April, May, or June,” he said. “Or something like that. I think tourism is going to be fairly strong this year. If you do it sooner, it is mostly our citizens that are getting that benefit.”

The reduction now, too, would assist businesses along the border, Sununu said. He imagined commuters, truckers, and residents who live in border communities immediately darting into New Hampshire — as they do for other things like big purchase ticket items that do not have a sales tax attached to them.

Sununu said many gas stations have become small grocery stores for milk and other items — and that is where most of those businesses make the bulk of their profit. Those towns also benefit from Massachusetts (and Maine and Vermont) shoppers frequenting other retail establishments.

“People do their grocery shopping where they buy gas now, so the ancillary business benefit, especially to the border towns … I think it would be a real boon and good one, to kickstart our summer economy to get it going soon and move it quickly,” he said.

Harnois said she could not predict whether gas prices would impact the state or tourism in 2022.

“That said,” she added, “in 2014 when gas prices were approximately $3.66 (per) gallon, visitor trips were up 5 percent and visitor spending up 4 percent during the summer season; in 2013 gas prices were about $3.64 (per) gallon, and visitor trips were up nine percent and visitor spending up 5.4 percent.”

In Massachusetts, where the state collects 24-cents per gallon, some like the idea of a holiday but others were not too keen on it.

The Mass Fiscal Alliance urged Gov. Charlie Baker to tap into some of the billions in rainy day funds to give drivers a break late last year when gas prices were 25 to 30 percent lower than they were now. About $50 million per month is collected from the tax so a two-month break would have left $4.2 billion in the fund.

A push by a small caucus of Republicans in the legislature last week was rejected by the Democrats in the majority — much to the chagrin of some who liked the idea.

Chip Ford, the executive director of Citizens for Limited Taxation, said the legislature did not even allow a roll call vote of the proposal.

"Multiple billions in over-taxation have been piling up in the state's coffers faster than can be spent, but a relatively small tax relief proposal by Gov. Baker is stalled in the Legislature — until at least May, if ever,” he said. “Democrats on Beacon Hill really are repelled by the thought of possibly returning any of the revenue bonanza to its rightful owners — the taxpayers who provided every cent of it."

Paul Diego Craney, a spokesperson for Mass Fiscal Alliance, said legislative leaders were “wrong to dismiss the idea” of providing gas price relief to Bay State drivers.

“They are failing to see the bigger picture,” he said. “With record-breaking prices being surpassed every few days, spending from working families and businesses will soon begin to decline unless there is some relief on the way … with the warmer weather arriving soon, it means businesses that rely on tourism will begin to start their season. (Leaders) cannot sit idly by as the economy declines due to their unwillingness to part with a small amount of gas tax revenue. The price of their inaction will cost the Commonwealth a lot more in the long-term.”

Baker’s press office did not return a request for comment.

With Massachusetts rejecting the idea, at least for now, it might be New Hampshire’s gain, if officials can get it approved, something Sununu hoped would happen soon.

“It’s a race,” Sununu said. “Timing is everything. You want to be first to do it and you want to show that differential to your neighbors. We should do it now before we are left behind. Right?”

Relief At The Pump In Other States

According to press reports, a number of states have already enacted gas tax holidays.

In Maryland last week, the legislature approved a 36-cent gas tax suspension for a month. The state of Georgia has suspended its 29.1- to 32.6-cent tax through the Memorial Day weekend.

A number of other states, including Maine, have proposals floated to freeze gas taxes temporarily or through the end of the year.

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