President Biden on Wednesday will call on Congress to suspend the federal gas and diesel taxes for the next three months, the latest effort by the White House to provide relief to Americans struggling with record-high gasoline prices.
Such a move, which is contingent on legislative action, would temporarily lift the 18 cent tax per gallon on gasoline and 24 cent tax per gallon on diesel during the summer months.
“A federal gas tax suspension alone won’t fix the problem we face, but it will provide families a little breathing room as we continue working to bring down prices for the long haul,” a senior administration official told reporters on a call previewing the announcement.
The official added that the three-month time frame was specifically to address the surging gas demand during the summer months when travel increases. In the longer term, however, the official acknowledged the revenues from the tax are a vital source of infrastructure funding.
Biden will lay out the proposal in a speech from the White House on Wednesday afternoon during which he will also call on states to suspend their gas taxes or provide rebates or other forms of relief, the official said. Additionally, Biden is expected to call on oil refinery companies to take steps to boost production to help alleviate gas prices, which are averaging roughly $5 per gallon across the nation.
The Hill first reported last week that the White House was giving a closer look to the federal gas tax holiday as prices surged upward due to global energy disruptions caused by Russia’s war in Ukraine.
Proponents of the tax holiday view it as a straightforward way to get consumers temporary relief from surging gas prices, though it depends on companies passing the savings on to consumers. The idea also has some prominent critics, with some like Obama economist Jason Furman arguing it could add to inflation.
The idea has divided Democrats, with some on Capitol Hill reacting cooly to the proposal because it would cut into a revenue source for road infrastructure projects.
“I’m glad that @POTUS is exploring ways to lower gas prices at the pump,” Sen. Tom Carper (D-Del.) tweeted Tuesday evening amid reports of Biden’s plans. “Still, suspending the primary way that we pay for infrastructure projects on our roads is a shortsighted and inefficient way to provide relief. We should explore other options for lowering energy costs.”
However, the senior administration official told reporters that Biden would ask Congress to replenish the Highway Trust Fund, which is supported by gas taxes, with other revenue in order to make it “whole” amid a gas tax suspension. The White House estimates it would take about $10 billion to do so.
The official also addressed concerns the suspension contradicted the White House’s stated goal of transitioning to renewable energy, with a goal of reaching net-zero carbon emissions by 2050.
“This is not a stepping back from the president’s commitment to transition to a clean energy economy, not a stepping back from any of his climate goals,” the official said. “It’s a recognition of the really unique moment that we are in students whose invasion of Ukraine and the stabilization of energy markets in the short term.”
It’s unclear how well Biden’s plea will be received on Capitol Hill, or how quickly lawmakers may move to pass legislation. Similar bills have already been introduced in Congress.
Energy Secretary Jennifer Granholm is separately holding a meeting with oil executives on Thursday to discuss ways to reduce gasoline and diesel prices, after Biden sent a letter to seven major companies demanding they take action to help lower costs for consumers.
In recent weeks, members of the progressive wing of the Democratic Party in Congress have called on the president to impose a windfall profits tax on major oil companies and pass the revenues on to consumers. Rep. Ro Khanna (D-Calif.) said last week that proponents of the tax were encouraged by Biden’s recent rhetoric, particularly a letter in which he called on major oil companies to step up production.
However, officials on the call were noncommittal about a potential windfall tax on top of a potential gas tax suspension, saying only that in remarks later Wednesday, “the president will speak to the importance of companies taking their record profits and investing them to expand supply and capacity.”
“We see [suspending the gas tax] as part of a suite of policies that are designed to provide that relief including policies that focus on the supply side,” the official added.
A number of states have already suspended their gas taxes, including Connecticut, Florida, Georgia, Maryland and New York. Over the weekend, the Virginia Senate defeated a proposed amendment by Gov. Glenn Youngkin (R) to suspend the state’s gas tax for three months.