Push to suspend gasoline taxes as prices spike in US

With gas prices at record highs in the United States, an increasing number of members of Congress and state lawmakers are calling for the suspension of the federal gasoline tax of 18.4 cents a gallon to provide relief for motorists.

Some state governors also are looking at a suspension of the gasoline tax in their own states.

Proposals for a "gas tax holiday "to counter rising inflation had been moving slowly in Congress and state capitols before the conflict between Ukraine and Russia.

A day after the conflict began, Missouri state Representative Andrew Schwadron, a Republican, filed legislation to suspend the state's motor fuel taxes for six months, citing an emergency to protect consumers from rising prices.

Suspension of the federal gas tax gained momentum last week amid surging prices. The average price for a gallon of regular gasoline hit a record of $4.33 on Friday, breaking the old mark of $3.99 set on July 8,2008, according to the American Automobile Association, or AAA.

A suspension is picking up support because energy analysts say US President Joe Biden has few options to quickly lower prices given the complexities of the oil industry's supply and demand dynamics.

But there are critics of a suspension. "The real problem with this approach at both the federal and the state level is that there's no way to ensure that the people will see these savings when they go to the gas pump to fill up their cars, their SUVs and trucks," said Jim Tymon, executive director of the American Association of State Highway and Transportation Officials. Groups that advocate for road and bridge funding say they would oppose suspending the federal tax.

"The tax on gas contributes the majority of the money to federal highway funding of bridges and road construction" and its removal will lead to more deficit spending, Ulrik Boesen, a senior policy adviser at the Tax Foundation think tank, told the Pittsburgh Tribune-Review. In turn, more deficit spending would likely "increase the nation's inflationary pressures," he added.

Lost revenue

Legislation pending in both the US House of Representatives and the Senate would offset lost revenue from a gas tax suspension by transferring an equal amount of general fund dollars to the accounts that fund state highway and public transit programs.

Governors and advocacy groups in numerous states, including Georgia and Ohio, have proposed the suspension of some or all state taxes or the delay of planned increases.

The lost gas tax revenue would be offset by directing $500 million of federal COVID-19 relief aid to state police and issuing $650 million in bonds to ensure infrastructure projects remain funded.

Governors from Michigan, Colorado, Wisconsin, Minnesota, New Mexico and Pennsylvania have jointly sent a letter to congressional leaders urging them to suspend or reduce the federal gas tax until the end of 2022.

"Money saved at the pump translates into dollars back in consumers' pockets for groceries, childcare, rent and more," the six Democratic governors wrote in a letter to congressional leaders.

Agencies contributed to this story.