President Biden Calls on Legislators to Declare a Three-Month Gas Tax Holiday

Democratic leaders have already shared their opposition to the proposal.

The White House released a proposal today for Congress to institute a three-month gas tax holiday to provide relief at the pump. President Biden has also called on states to take similar action to alleviate the financial pain of record-high fuel prices.

Some experts say the proposal has already lost traction, particularly due to opposition from the president's own party.

Key Takeaways

  • Due to increased oil prices, Russian sanctions, and other factors, gas prices have reached an all-time high in the U.S.
  • The White House has proposed a federal three-month gas tax holiday and has also called on states to provide similar relief at the pump.
  • Democratic leaders have expressed opposition to the proposal, citing fears of profiteering from gas companies.

What a Gas Tax Holiday Would Entail

The average price per gallon of gasoline exceeded $5 for the first time last week, prompting President Biden is calling on Congress to institute a gas tax holiday through the end of September. According to a White House fact sheet, the federal government institutes a fuel tax of 18 cents per gallon on gasoline and 24 cents per gallon on diesel.

The president has also requested that individual states consider a similar tax holiday or some other form of relief. If instituted, the benefit could vary depending on where you live. In Pennsylvania, for instance, there's a tax rate of 57.6 cents per gallon of gasoline and 74.1 cents per gallon of diesel, while Alaska has an 8.95 cent-per-gallon tax on both gasoline and diesel.

Democrats Not Convinced a Gas Tax Holiday Would Help

Last month, Democrats submitted a bill to provide the Federal Trade Commission more power to tackle price gouging at the pump, but the bill didn't include a gas tax holiday.

House Speaker Nancy Pelosi and other top Democratic leaders have expressed their opposition to a holiday, questioning whether it'll give gas companies opportunities to profit even more by maintaining prices where they are.

Even if a federal gas tax holiday was instituted and gas companies didn't try to capture that profit, House Majority Leader Steny Hoyer doesn't believe it would make much of a difference. Others say it's too little, too late.

For a smaller vehicle with a 12-gallon tank, filling up the full tank would cost close to $60. Cutting the federal gas tax would result in just $2.16 in savings. For larger vehicles, the savings are even less impressive.

If states were to add their own gas tax holiday, the benefit could be greater but still somewhat limited. Maryland instituted a 30-day gas tax holiday in March but didn't extend it, and the small political gain from the decision doesn't encourage other state legislators to follow suit.

The president has already committed to releasing a record 1 million barrels of oil per day from the Strategic Petroleum Reserve to increase the supply, expanded access to E15 and other biofuels, and taken other steps, but there's no guarantee that prices will come down anytime soon.

Article Sources
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  1. AAA. "National Average Gas Prices."

  2. The White House. "FACT SHEET: President Biden Calls for a Three-Month Federal Gas Tax Holiday."

  3. IGEN. "Gas Taxes by State."

  4. Politico. "Gas, formula, inflation: Voter anxieties motivate struggling Dems."

  5. Politico. "Biden announces a likely doomed gas tax holiday."

  6. Comptroller of Maryland. "Maryland's Gas Tax Holiday."

  7. White House. "FACT SHEET: President Biden Calls for a Three-Month Federal Gas Tax Holiday."

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