President Biden said he is considering a federal gas tax holiday and hopes to make a decision by the end of the week. Pressure is building in Washington to do more to lower rising costs for Americans and a temporary break on the tax is gaining steam as one of the options.
Talk of finding new ways to provide relief increased after gas hit a national average of $5.01 per gallon last Monday, according to AAA. The company said that was an all time high due in part to robust domestic demand during the summer driving season and decreasing supply. A barrel of oil cost $120.
So how would a break on gas taxes save Americans money? The federal gas tax is 18.4 cents per gallon, translating to $1.84 in savings on a 10 gallon fill up. If the national average is $5 per gallon, the bill would go from $50 to $48.16.
“I’m no fan of the tax holiday. I think that’s kind of a gimmick. And eventually you have to reverse it,” former U.S. Treasury Secretary Larry Summers told “Meet the Press”.
The gas tax helps the federal government pay for road and infrastructure projects. The Committee for a Responsible Federal Budget estimated earlier this year that a tax holiday from March to December would decrease that revenue by $20 billion. That’s nearly half of the Highway Trust Fund’s $43 billion expected revenue.
“We just did a big infrastructure bill to help fund the roads. So, if we remove the gas tax that takes away the funding that was just passed by Congress to be able to do that,” U.S. Energy Secretary Jennifer Granholm said on “State of the Union”.
States have an additional gas tax which is on average 30 cents per gallon. Maryland, Georgia, New York, Florida and Connecticut have enacted temporary holidays and other states are considering it.
