Donald Trump and Josh Hawley’s Federal Gas Tax Holiday Would Save Drivers Less Than $9 Per Month
A week before the United States began war with Iran, the average price of gas in America was less than $3 per gallon.
The war was supposed to last about a month. Twelve weeks later, it continues with no end in sight. The Strait of Hormuz is still closed. Global oil prices have risen rapidly and as a result drivers are now More than $4.50 per gallon gas. Overall, high gas prices spent an estimated $42 billion From Americans’ wallets.
With the midterms approaching, it’s understandable why President Donald Trump and his allies in Congress would want to provide some relief to drivers.
There is a president floating The idea is to suspend the federal excise tax on gasoline, which adds 18.4 cents per gallon to the pump price (and 24.4 cents per gallon for diesel fuel).
Sen. Josh Hawley (R-Mo.) quickly responded by introducing a bill that would suspend the federal gas tax for 90 days. “American workers and their families deserve emergency relief, and this legislation will do just that,” Hawley said. a statement while introducing the bill.
So how much relief will the gas tax holiday actually provide? Apparently very little.
The average driver would save less than $9 a month if the federal gas tax was suspended, according to one study. analysis It was released Monday by the Peter G. Peterson Foundation, which advocates for sound fiscal policies. Of course, every dollar counts, but these savings won’t provide meaningful relief from high gas prices.
Meanwhile, a three-month suspension of the fuel tax as Hawley proposes would create a $10.5 billion shortfall in the federal Highway Trust Fund, which is fueled by revenue from excise taxes on gasoline. This includes the additional interest cost of approximately $3 billion in borrowing that will be required to cover the deficit. accordingly Committee for a Responsible Federal Budget (CRFB).
The trust fund is already facing bankruptcy as soon as 2028, and a temporary gas tax holiday would accelerate that crisis. The CRFB estimates that a three-month gas tax holiday would cause the trust fund to deplete seven weeks earlier than currently expected.
It’s good to see politicians instinctively turning to tax cuts as a way to lower the cost of living; But like all tax cuts, this is a policy that only works if you also cut spending. Unfortunately, road construction and repair still necessary Even if gas is expensive.
Can we find better ways to fund highways and other transportation infrastructure that don’t require a federal gas tax? Certainly! But Trump and Hawley do not propose to do this. They propose to blow another hole in the federal budget in order to escape the political consequences of bad decision-making.
