Earlier this month, President Joe Biden called for a gas tax holiday. There’s no doubt consumers need relief. Gas prices have hit a national average of nearly $5.00 per gallon but suspending the gas tax is not a serious approach to lowering prices. It’s a bad idea that would make America’s infrastructure problems worse without helping America’s working families or bringing meaningful relief at the pump.
Experience and data show that suspending the gas tax, also called a user fee, would have little impact on the cost of gasoline. According to budget modeling conducted earlier this year by Penn Wharton, suspending the federal gas tax for ten months from March to December 2022 would save less than $50 per person — between $16 and $47 to be exact. President Biden is proposing a three-month suspension at just a fraction of those already meager savings.
Just a handful of states have taken it upon themselves to pass their own state user fee suspensions, and still there is little bipartisan support in Congress for a federal gas tax holiday. The reason is simple — the state holidays failed to produce the desired effect while their coffers for roadway improvements suffered.
There’s bipartisan agreement that a gas tax holiday is not the right approach. Chair of the House Committee on Transportation and Infrastructure Peter DeFazio (D-OR) noted, “This policy would at best achieve only minuscule relief while blowing a $10 billion dollar hole in the Highway Trust Fund.” Republican Senator Roger Wicker from Miss., said, “A gas tax holiday would do next to nothing to relieve the pain Americans are feeling at the pump.” This is one of the few issues today that can bring together Mitch McConnell and Nancy Pelosi.
The minimal savings from a gas tax holiday will be temporary and even undercut new infrastructure investment in communities across the country. Infrastructure investment that is critical to restoring economic growth.
User fee revenues at the pump have a direct line of effect on the solvency of the Highway Trust Fund which is dedicated money to improve roads and mass transit. By suspending the gas tax, lawmakers would be further undermining progress on infrastructure improvements, which are already being hampered by inflation in the cost of construction materials and labor.
There are several initiatives the Administration could take but suspending the federal gas tax is not one of them. We need solutions like increasing refining capacity and efficiency along with new sources of oil from North America. Those actions will provide long-term relief and act as the bridge we need to transition to renewable sources of energy.
With rising prices at the pump, elected officials are desperate for ways to show that they are responding to consumers stretched thin by inflation. They are hoping Americans buy into simple soundbites rather than holding elected officials accountable. But Americans deserve better.
Now is the time for action to truly help families keep more of their hard-earned money, not more gimmicks.
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