We Could Get a 'Gas Tax Holiday'

Lawmakers are pushing the idea to ease the pain at the pumps
By Arden Dier,  Newser Staff
Posted Mar 10, 2022 12:38 PM CST
We Could Get a 'Gas Tax Holiday'
Gas prices are seen in front of a billboard advertising HBO's Last Week Tonight in Los Angeles, March 7, 2022.   (AP Photo/Jae C. Hong, File)

With gas prices at their highest in years—an average of $4.318 per gallon in the US as of Thursday—and expected to climb higher, some lawmakers are calling on President Biden to back the suspension of a federal gas tax to ease the financial burden. A federal "gas tax holiday" would mean Americans save 18.4 cents per gallon for the rest of 2022, a stretch in which gas prices are expected to remain above $4 on average, per the AP. Even if Biden does back the suspension, the measure would likely require bipartisan support in Congress. More on the talk:

  • Governors' demand: Sens. Maggie Hassan of New Hampshire and Mark Kelly of Arizona (both are Democrats in tough re-election fights) are urging the Biden administration to back the suspension, reports the Wall Street Journal. And the Democratic governors of Colorado, Michigan, Minnesota, New Mexico, Pennsylvania, and Wisconsin have made the same request of congressional leaders. "A federal gas tax holiday is a tool in the toolbox to reduce costs for Americans," the governors write in a joint letter, per the Pittsburgh Tribune-Review.

  • White House discussions: The Biden administration has been discussing the pros and cons of such a move for weeks, with some officials arguing it wouldn't be of much help to consumers, per the Journal. Some critics fear that oil companies, which Biden has warned against price gouging, would raise pretax prices in response.
  • Alternatives: Officials are also discussing more releases from government oil reserves and strategies to make Europe less dependent on Russian oil while pushing other countries to boost production. Some Republicans are requesting an expansion of US oil and natural-gas production, but the White House says companies already have unused federal leases.

  • The cost: There are concerns from both parties about lost infrastructure funding. The nonprofit Committee for a Responsible Federal Budget has predicted the move would cost the government $20 billion in funding for roads—"a priority of Mr. Biden's," per the Journal. Pending legislation in the House and Senate would offset lost revenue "by transferring an equal amount of general fund dollars to the accounts that fund state highway and public transit programs," per the AP.
  • No thanks: Ulrik Boesen, a senior policy adviser at the Tax Foundation think tank, is not a fan of the idea. "The tax on gas contributes the majority of money to federal highway funding of bridges and road construction" and its removal will lead to more deficit spending, he tells the Tribune-Review. In turn, more deficit spending would likely "increase the nation's inflationary pressures."

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  • States take action: States including Pennsylvania, Missouri, Maryland, Minnesota, New York, and Ohio are considering suspending or slashing state gas taxes, per the AP. A bill to suspend Michigan's 27.2-cents-per-gallon excise tax from April through until September at a cost of $725 million has passed the Republican House and is expected to pass the Senate next week, per the Detroit News. GOP Georgia Gov. Brian Kemp says he plans to authorize suspension of the state's 28.7-cents-per-gallon excise tax through until the end of May, per Fox News.
  • Conspiracy theorists' view: All this has led to unfounded speculation that the Biden administration wants gas prices to climb so as to boost sales of electric vehicles. Some even claim government officials can stop these vehicles from driving whenever they want. As the AP feels compelled to explain, "electric vehicles work similarly to gas-powered ones; the government cannot shut down individual vehicles at will."
(More gas prices stories.)

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