Jun 23, 2022
Industry Expresses Opposition to Gas Tax Holiday
On June 22, 2022, President Biden called on Congress to send him a bill suspending the 18.4 cents per gallon federal gasoline tax for 90 days. Members of the House and Senate proposed fuel tax suspensions earlier this year, but this is the first Biden has expressed his position. The President has also called on states to pause their gasoline taxes, as well.
Although Biden added that the Highway Trust Fund should be compensated for the $10 billion in foregone revenue that would result from his proposed gas tax suspension, industry leaders have come out against the gas tax holiday.
“A temporary gas tax holiday sets a bad precedent and undermines the funding mechanism in the infrastructure investment law that has been the signature policy achievement of the Biden presidency,” said Dave Bauer, president and CEO, American Road & Transportation Builders Association (ARTBA). “Senior administration officials know full well the 18.4-cents-per gallon federal gasoline tax is not the factor driving increased prices at the pump.”
ARTBA recently released an analysis of 177 changes in gasoline tax rates in 34 states between 2013 and 2021 that found only 18 percent of price increases, or decreases, were passed through to motorists in the two weeks after a change took effect. “We urge members of Congress to continue resisting such a proposal on a bipartisan basis as they have been doing since the beginning of the year,” Bauer said.
“On the heels of receiving the largest package for infrastructure funding in the nation’s history, the Biden Administration has asked Congress to suspend the gas tax,” said National Stone, Sand & Gravel Association (NSSGA) President and CEO Michael Johnson. “Suspending the federal gas tax will upend the historic investments just put into law and jeopardize our surface transportation programs that are in desperate need of updates and modernization.”
“Repeated studies show a gas tax holiday is a shortsighted fix and will not help in alleviating higher prices paid by consumers,” Johnson said. “NSSGA shares the views of many leaders on both sides of the aisle in Congress that this proposed tax holiday will not put money back in the hands of the consumer and will harm the economy.”
The congressional response to President Biden’s call is unclear at this time, reported ARTBA. House Speaker Nancy Pelosi (D-Calif.) today was noncommittal on whether the plan would be taken up in the House, and Senate Minority Leader Mitch McConnell (R-Ky.) in a Senate floor statement called the proposal an “ineffective stunt.” When a similar gas tax suspension was floated in 2008, then President Barack Obama referred to the proposal as a “gimmick.”
“The federal gasoline tax is the single largest revenue stream that supports the federal highway and public transportation investment commitments from the 2021 infrastructure bill,” writes ARTBA. “Pausing collections not only jeopardizes the bipartisan compromises that enabled that landmark measure, but such a maneuver would establish a precedent that these user fee revenues could be halted whenever elected officials feel the price of gas is too high. There would be no guarantee the fuel tax would return and no guarantee any future suspensions would include a reimbursement for lost highway and transit program revenue.”