Would a gas tax holiday help? Romney says the problem’s not 18¢ per gallon, it’s the $2 price hike
Federal gas tax savings might buy you a Big Gulp but it won’t pay your rent, Utah trucking official says
As gasoline and diesel prices soar to record levels, American drivers would unquestionably welcome some relief at the pump.
President Joe Biden called on Congress Wednesday to enact a federal gas tax holiday. If the idea moves forward, it would mean a temporary suspension of the federal fuel tax of 18.4 cents per gallon of gasoline and 24.4 cents per gallon of diesel.
As motor fuel prices have shot above $5 per gallon, a temporary reprieve sounds good, but the relief is relatively small. For example, the average price for gasoline in Utah was $5.17 a gallon on Tuesday, which means filling a 16-gallon tank will cost about $82.75. Forgiving the federal fuel tax would shave off less than $3 per fill-up.
“It’s not going to pay rent. It just pays for the soda that I’m buying at the gas station,” said Rick Clasby, executive director of the Utah Trucking Association.
Sen. Mitt Romney, R-Utah, criticized the proposal in a Tweet: “Biden gas tax gimmick fail: the problem’s not the 18 cents, it’s the $2.00 hike since last year. While oil price is global, US can impact expectations with much more drilling and pipelines.”
Drivers of diesel-fueled vehicles, such as semitrucks, would experience higher per-gallon relief, since the federal tax on diesel is 24.4 cents per gallon. However, filling two 150-gallon tanks would cost at least $1,500, and the proposed tax holiday would reduce the total cost by about $55.
Even so, Clasby said the tax revenue would be better spent on infrastructure “because there’s huge infrastructure needs.”
The federal fuel tax helps fund highway and bridge construction, mass transit and underground fuel tank maintenance, so offering a tax holiday, while politically popular, would cut into federal transportation funding.
A gas tax holiday doesn’t address the larger issue of energy independence, he said.
“The gas tax holiday, especially for a couple of months, is by no means a long-term solution and probably not worth the effort,” Clasby said.
According to the Wasatch Front Regional Council, the metropolitan transportation and growth planning organization for the Wasatch Front, the impacts of such a tax holiday should be carefully considered.
“WFRC recognizes that Americans are facing great inflationary pressures, at the gas pump and beyond. Transportation projects being constructed in Utah are impacted by these same pressures.
“As actions are evaluated to help alleviate inflationary pressure, such as a federal gas tax holiday, consideration should be given to the impact that such a holiday would have on the revenues available for stable and predictable infrastructure investment. A well-functioning transportation system is essential to the strength and growth of our economy,” according to a statement.
In March, Utah Gov. Spencer Cox was asked whether it was feasible to temporarily stay Utah’s 31.9 cents per gallon state fuel tax. At the time, gasoline had just reached $4 a gallon.
Cox said a tax holiday had been discussed but said it was “complicated” given the state’s restrictions in the Utah Constitution that preclude shifting funds within the state budget, and the fact that the gas tax pays the salaries of Utah Department of Transportation employees.
“If I were to unilaterally remove the gas tax, I would also have to lay off all of UDOT’s employees, which is not great. That’s a really bad idea,” he said at the time, while addressing reporters’ questions during his monthly news conference on PBS Utah.
Rising fuel prices will further complicate states’ and municipalities’ efforts to build projects made possible by the $1.2 billion Infrastructure Investment and Jobs Act that was passed by Congress last year.
Government agencies already facing rising prices as well as materials and labor shortages are also contending with record motor fuel costs for their trucks and construction equipment.
In 2008, then-Democratic presidential candidate Barack Obama also described gas tax holidays as a “gimmick,” instead proposing a $1,000 tax cut for every American.
“I know they need relief, which is why I’ve offered a middle-class tax cut for every American, $1,000 for working families so that they can deal not only with rising gas prices, but rising health care costs and rising grocery costs. But for us to suggest that 30 cents a day or three months is real relief, that that’s a real energy policy, means that we are not tackling the problem that has to be tackled,” Obama said at the time.