US may suspend federal gas tax

With gas prices at record highs across the US, an increasing number of Congress members and state lawmakers are calling for the suspension of the federal gasoline tax of 18.4 cents a gallon to provide relief to motorists.

Some governors also are looking at suspending the gasoline tax in their own states.

Proposals for a "gas tax holiday" to counter rising inflation had been moving slowly in Congress and state capitols before the Russia-Ukraine conflict.

A day after the that conflict began, Missouri state Representative Andrew Schwadron filed legislation to suspend the state's motor fuel taxes for six months, citing an emergency to protect consumers from rising prices.

"The quickest way that we could provide that relief would be by temporarily suspending that gas tax," the Republican legislator said.

Suspension of the federal gas tax gained momentum last week amid surging prices. The average price for a gallon of regular gasoline hit a record of $4.33 on Friday, breaking the old record of $3.99 set on July 8, 2008, according to the American Automobile Association (AAA).

A suspension is picking up support because energy analysts say President Joe Biden has few options to quickly lower prices given the complexities of the oil industry's supply and demand.

But there are critics of a suspension.

"The real problem with this approach at both the federal and the state level is that there's no way to ensure that the people will see this savings when they go to the gas pump to fill up their cars, their SUVs and trucks," said Jim Tymon, executive director of the American Association of State Highway and Transportation Officials.

Groups that advocate for road and bridge funding say they would oppose suspending the federal tax.

"The tax on gas contributes the majority of money to federal highway funding of bridges and road construction" and its removal will lead to more deficit spending, Ulrik Boesen, a senior policy adviser at the Tax Foundation think tank told the Pittsburgh Tribune-Review. In turn, more deficit spending would likely "increase the nation's inflationary pressures", he added.

Legislation pending in both the US House and Senate would offset lost revenue from a gas-tax suspension by transferring an equal amount of general fund dollars to the accounts that fund state highway and public transit programs.

Governors and advocacy groups in numerous states, including Georgia, Ohio, Illinois, Maryland, New York, Ohio and Rhode Island, have proposed the suspension of some or all state taxes or the delay of planned increases.

Pennsylvania's gasoline tax of 57.6 cents per gallon is the highest in the nation, just ahead of California's. Pennsylvania Senate President Pro Tempore Jake Corman, a Republican running for governor, said he is introducing legislation for a roughly one-third reduction through the rest of the year.

The lost gas-tax revenue would be offset by directing $500 million of federal COVID-19 relief aid to state police and issuing $650 million in bonds to ensure infrastructure projects remain funded.

California Governor Gavin Newsom has proposed a tax rebate to California car owners to ease the pain of rising gas prices. The average price for a gallon of gasoline in California reached $5.57 on Wednesday — the highest nationally, according to the AAA.

The governors of Michigan, Colorado, Wisconsin, Minnesota, New Mexico and Pennsylvania have jointly sent a letter to congressional leaders urging them to suspend or reduce the federal gas tax until the end of the year.

"Money saved at the pump translates into dollars back in consumers' pockets for groceries, childcare, rent and more," the six Democratic governors wrote in a letter to congressional leaders.

A bill to suspend Michigan's 27.2-cents-per-gallon excise tax from April through until September would cost about $725 million. The office of Michigan Governor Gretchen Whitmer, a Democrat, said it could hamper road repairs. The bill has passed the Republican-controlled House and is expected to pass the Senate next week.

"Michigan has billions of dollars in surplus revenue available," House Speaker Jason Wentworth said in statement Wednesday. "The solution here isn't complicated. Republicans are going to take action today and put a real plan on the governor's desk to actually lower the cost at the pump."

Some Senate Democrats who are facing a difficult re-election in November also renewed their call for legislation to halt the federal tax and urged Biden to support it.

"I continue to call on the Biden administration to take steps to mitigate the impact of rising prices at the pump through the passage of my bill that would eliminate the federal gas tax for 2022," said Senator Maggie Hassan of New Hampshire, a co-sponsor of the bill.

The Associated Press contributed to this story.