Florida reinstated its per-gallon gasoline sales tax today after a month-long delay imposed by Gov. Ron DeSantis and state lawmakers in October.
Last month’s savings of 25.3 cents on every gallon of gasoline appeared to have a less obvious impact on drivers, thanks to another spike in oil prices in early October. However, there were other factors at play, including when gas stations purchased gasoline.
Gas prices, including the tax suspension, it fell to Florida by about 10 cents a day after the tax holiday went into effect on Oct. 1, and since the beginning of the month, it has taken five days for the average price of a gallon of regular gas in Florida to drop 20 cents, according to a Palm Beach Post analysis of data from the American Automobile Association and technology company GasBuddy.
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For example, motorists who filled up on Oct. 5 saw the lowest average cost for the month, about $3.17 a gallon, before the average cost rose again and even surpassed the cost on Sept. 30 at about $3.37.
So for most people who filled up at a gas station, it was often difficult to calculate the tax savings.
“That’s hard for consumers to understand. They have that pump they can just look at,” Patrick De Haan, head of oil analysis at GasBuddy, said of the holiday’s impact on the gas tax. “What consumers see is not the whole story.”
The highest average price in the Sunshine State hit $3.40 around the second week of October, days after a group of oil-producing nations known as OPEC+ decided to cut output by 2 million barrels a day. The average gallon of gas in the United States hit its peak at the same time, rising 12 cents since the start of the month.
In the first two weeks of October, average gas prices in the U.S. overall rose 11 cents, while average gas prices in Florida rose 2 cents. Still, it’s been hard to compare Florida’s market to that of any other state because of a practice called “price cycling,” where prices typically ebb and flow on schedule.
Additionally, Florida is a commuter state with more tourism than most states, so there is more pressure on fuel prices.
Still, the holiday tax holiday “softened the blow” of the price hike, De Haan said. If he wasn’t, motorists would pay even higher prices.
The good news regarding the reintroduction of the fuel sales tax is that gasoline prices are falling again across the state, according to AAA — The Auto Club Group. For the past week, the state average fell 7 cents to $3.29 a gallon, the group said Monday.
AAA calculated the average price of gasoline in Florida for the month of October to be $3.33 per gallon, down about 6 cents from the September 30 price.
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Another factor in the timing of the tax credit for consumers is when gas stations purchased their fuel.
According to the Supreme Public Prosecutor’s Office, it is against the law for an “end supplier, wholesaler, importer, reseller or retailer of fuel” to take advantage of the tax holiday or not provide this benefit to the consumer. But that’s only if the gas station bought gas from its supplier at a discounted price.
“Gas stations that do not purchase tax-reduced gas from their suppliers would not be required to pass on the tax credit to their customers during the tax holiday,” the attorney general’s website said. Gas stations also don’t have to sell gas at a certain price, nor are they considered price gouging unless their prices go down.
If a gas station bought its supply before the tax holiday went into effect, it would continue to sell gas with the tax until it runs out, said Ned Bowman, executive director of the Florida Petroleum Marketers Association. And if gas stations still have tax-reduced supplies after Nov. 1, the gas should be sold tax-free until it’s gone.
Bowman said consumers save about $7 million a day in taxes.
“Anytime the state can give money back directly to the consumer, that’s a good thing,” he said.
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Gas tax holidays aren’t as beneficial as others, such as sales tax holidays, where big-ticket items like computers or generators can yield more substantial savings, said Deanne Butchey, a professor of finance at Florida International University.
Drivers who get fuel during these tax credits will save between $2.50 and $50 per fill-up, she said.
“One does not usually fill one’s tank more than once in a short period of time. So the financial impact on consumers is negligible, although it may be a good political ploy,” she said.
The bottom 95% of families will benefit from less than half of the tax break, an analysis by the Institute on Taxation and Economic Policy suggested, with low-income drivers unable to time their gas purchases like other drivers.
“They’re a really inefficient way to use public funds, especially if you’re trying to improve the lives of the people who are most affected by things like temporary gas increases or inflationary price increases,” said the ITEP state policy analyst. Marco Guzman, adding that other solutions, such as income tax credits or rebates, could be more beneficial.
Dominic Calabro, president and CEO of Florida Taxwatch, a group that supported the holiday tax holiday, also noted that while the price of gas has fluctuated, “any savings are still just that: savings.”
“And at a time of record inflation, with much of our state still reeling from Hurricane Ian, the gas tax cut has helped ease the burden on our wallets and provided much-needed financial — and emotional — relief,” he said. in the statement.
If possible, drivers should try to fill up by Monday, the last day of the gas tax holiday. Gas prices may not automatically increase by 25 cents immediately, but it could be a shock to consumers if the reintroduced gas tax is combined with more chaos in the oil sector.
The average cost of a gallon of regular gas in Florida on Friday was $3.31, according to AAA. In the West Palm Beach metro area, that average is $3.49.
“Every little bit counts,” Butchey added.
Hannah Morse covers consumer issues for The Palm Beach Post. Email [email protected], call 561-820-4833 or follow her on Twitter @mannahhorse.