The Iran war has pushed U.S. gasoline prices above $4 a gallon nationwide and some lawmakers are now looking at suspending the federal gas tax to try to blunt the hit to consumers and businesses.
Trump Keeps Gas Tax Pause Open
Asked about a federal gas tax holiday at a Cabinet meeting last Thursday, President Donald Trump said he had “thought about” it but suggested states should weigh suspending their own fuel taxes first. “People have talked about” a gas tax suspension, Trump said, according to an Associated Press report.
“It’s something we have in our pocket if we think it’s necessary.” As prices climbed, the administration released millions of barrels from the Strategic Petroleum Reserve, temporarily waived some sanctions affecting Russian and Iranian oil shipments already at sea, and sought a coalition to help police the Strait of Hormuz, through which about one-fifth of globally traded oil normally passes.
Congress Would Need To Approve It
According to AP, a gas tax holiday would temporarily suspend the federal levy of 18.4 cents a gallon on gasoline and 24.4 cents on diesel, not counting separate state taxes that are often higher. The tax generates more than $23 billion annually for federal highway and public transit programs, and the president cannot halt it alone. Congress would have to approve any suspension. With Republicans controlling both chambers, such legislation is unlikely to advance unless Trump backs it.
Democrats have introduced bills anyway. Sen. Richard Blumenthal (D-NY) of Connecticut, co-sponsoring the Gas Prices Relief Act with Sen. Mark Kelly (D-Ariz.), said last Thursday that “Trump’s war of choice with Iran is driving up gas prices across the country — and Americans shouldn’t have to bear the additional economic burden of Trump’s reckless decision making.” Their bill would suspend the tax through Oct. 1, while Rep. Chris Pappas (D-NH) has filed a similar House measure.
States Move First As Costs Rise
Industry groups warn there are trade-offs. The American Road & Transportation Builders Association said that the gasoline tax is the largest single funding source for federal highways and transit, and that even if Congress replaced the lost revenue with general funds, a holiday could reportedly widen the deficit and weaken long-term infrastructure funding.
Some states are acting on their own. Georgia Gov. Brian Kemp (R) signed a 60-day suspension of the state’s 33-cent gas tax and 37-cent diesel tax on March 20, and state tax officials said the pause runs through May 19. AP reported Georgia’s move came as other states, including California, Virginia, Connecticut, Florida, Maryland and Utah, weighed similar breaks.
Photo Courtesy: Alfonso Soler on Shutterstock.com
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