Several states have taken steps to temporarily roll back their gasoline taxes, a move the Biden administration is considering backing on the federal level as the cost of fuel has surged past $4 a gallon.
Lawmakers in Maryland are scheduled to hold a hearing Tuesday on a bill that would suspend the state’s approximately 37 cents-per-gallon gas tax for 30 days and has the support of Governor Larry Hogan. The suspension could take effect as soon as Thursday if the bill is fast tracked.
Georgia’s House of Representatives has passed a similar measure with the support of Governor Brian Kemp. It awaits action in the state Senate. Florida imposed a one-month suspension that takes effect in October, after the tourist season.
But the federal effort still faces skepticism from both parties in Congress, where it would need to be approved.
“The problem is oil companies and gas stations rarely pass that through to customers,” Representative Jared Huffman, a California Democrat said in an interview Sunday. “What I don’t want to do is line the pockets of folks who are already raking in record profits. I would need to be assured it would be passed through to the consumer.”
Policy makers in California are discussing some sort of rebate program to get around that problem to make sure any savings are passed on to the customer, Huffman said.
The average price of a gallon of unleaded gasoline in the U.S. was $4.32 on Sunday, according to the auto club AAA. U.S. drivers currently pay an average of 57 cents per gallon in federal and state taxes, according to the American Petroleum Institute.
Legislation introduced last month by Georgia Democratic Senator Raphael Warnock would suspend the 18.4 cent federal gas tax until January 1, 2023. The legislation is co-sponsored by Democratic Senators Mark Kelly, Maggie Hassan, Debbie Stabenow, Catherine Cortez Masto and Jackie Rosen.
White House Press Secretary Jen Psaki said the president will continue to consider a range of steps to address gasoline prices the administration expects to keep rising.
“Obviously, what we’re trying to do is mitigate the impact,” she said.
Democratic governors in Michigan, Wisconsin, Minnesota, Pennsylvania and New Mexico last week sent a
“We need to do all we can to put money back in people’s pockets,” Michigan Governor Gretchen Whitmer said in a tweet.
Treasury Secretary Janet Yellen said the administration is “looking at a range of things that we might do to relieve consumers of the gas tax.”
“There’s a concern in cutting the gas tax that much of the benefit of it — especially when supplies are very tight — would go to oil companies,” she told reporters at an event in Denver on Friday.
Trust fund
Motorists in California, where the taxes are highest, face a total per-gallon tax of 86.55 cents. That includes a state excise tax of 51.1 cents per gallon and 17.05 cents per gallon in other state taxes, in addition to the federal gas tax.
As recently as last year, some lawmakers were considering increasing the federal gas tax to help close a yawning gap in federal highway funding that is estimated to be as high as $13 billion before the passage of a $550 billion infrastructure bill by Congress last year.
That’s because the Highway Trust Fund, which pays for roadway and transit systems, is financed primarily through the federal gas tax. That only brings in $43 billion per year while federal spending topped $56 billion annually before the $550 billion infrastructure bill was passed in November 2021, according to the Congressional Budget Office.
The highway trust fund has not been able to sustain itself from gas tax collections since 2008. Lawmakers have routinely transferred billions from other areas of the federal budget to close the gap, including $118 billion that was included in the bipartisan infrastructure bill that was approved by Congress last year.
Jim Tymon, executive director of the American Association of State Highway and Transportation Officials, said the gas tax frequently becomes a target of politicians at times when drivers are feeling the pinch at the pump. He warned drivers might not see any savings at the pump even if the federal gas tax is suspended because oil companies might pocket the extra proceeds, however.
“While inflation is a problem we clearly need to address, there’s no guarantee savings would be passed on to consumers,” he said.
— With assistance from Vincent Del Giudice
