With gas prices hovering just around $5 per gallon, President Joe Biden is expected to make a decision by the end of the week on whether to endorse a federal gas tax holiday.
In February, a measure was submitted in the Senate to halt the tax, which adds 18.3 cents per gallon. It hasn't been put to a vote yet, but the president may press lawmakers to do so to lower gas prices, which have been driven up by growing demand, higher oil prices, and Russia's war in Ukraine, among other things.
President Joe Biden Considers Gas Tax Holiday
State gas taxes have been postponed in Maryland, Georgia, Connecticut, New York, and Florida while more than a dozen additional states are considering similar measures. According to a March Politico/Morning Consult poll, 72 percent of Americans approve the suspension of their state's fuel tax.
California Governor Gavin Newsom proposed a $400 refund for households with a registered automobile in his state budget. At least 20,000 $150 gas cards have already been awarded in a lottery in Chicago. According to The Washington Post, the Biden administration is also considering into gas rebate cards.
The Gas Tax Relief Act, introduced by Democratic Senators Maggie Hassan and Mark Kelly, would put a hold on the federal fuel tax, which is now 18.3 cents per gallon for retail gasoline and 24.3 cents per gallon for diesel, until January 1, 2023. The average American driver would save $2.75 every time they filled up.
Members of the Biden administration have stated that the president is seriously contemplating supporting a federal gas tax freeze. On June 19, US Treasury Secretary Janet Yellen stated it's "definitely a concept worth examining."
Critics, including fellow Democrats in Congress, argue that even temporarily lowering the levy will harm the infrastructure projects it supports. According to the Committee for a Responsible Federal Budget, a gas tax holiday would cost $20 billion, at a time when Biden's Build Back Better plan appears to be running out of steam.
Some analysts claim that a gas tax holiday does not alleviate oil supply difficulties, but rather encourages Americans to drive more. It may also delay the shift to environmentally friendly energy sources, as per CNET.
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Why Gas Tax Holiday Might Not Work?
Senior Democrats in the House have already expressed reservations about Biden's gas tax holiday. Speaker Nancy Pelosi and others have questioned if the program would result in lower gas prices instead of more profits for gas corporations.
Last month, Democrats decided not to include it in their own plan aimed at cutting gas costs. Biden issued a preemptive defense of the idea on Tuesday, claiming that while it will have a financial impact on the highway trust fund it would not have an impact on significant road construction and substantial maintenance.
As millions of Americans prepare for summer travel, especially during next month's July Fourth weekend, Biden's demands for Congress and states to act on a gas holiday will arrive. However, any government gas holiday would be unlikely to clear the Senate without the backing of a majority of Democrats, much alone numerous Republicans.
Multiple Democrats agreed on Tuesday evening that the most likely option was for Biden to put pressure on states to establish their own gas tax holidays as states like Maryland have previously done, albeit with modest electoral advantages.
Some Democratic senators privately blasted the action as "too little, too late," given that gas prices are anticipated to increase much more significantly this summer, with no long-term strategy in place to counteract them. Nonetheless, Democrats in some of the country's most competitive elections applauded the notion, eager to see Biden take action on rising gas prices, as per Politico via Yahoo.
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