AASHTO Journal - Biden Endorses Temporary Suspension of Federal Gas Tax

In a statement released June 22, President Biden (seen above) called for a three-month federal gas tax “holiday” to “give Americans a little extra breathing room” as gas prices remain around $5 per gallon.

[Above photo via the White House]

The American Association of State Highway and Transportation Officials helped spearhead efforts earlier this year to dissuade Congress from imposing a gas tax holiday due to the potential impact on the Highway Trust Fund—a critical source of the revenues underpinning the $1.2 trillion Infrastructure Investment and Jobs Act, signed into law in November 2021.

In a letter sent to leadership in both the House of Representatives and the Senate in February, AASHTO and 23 other groups said there was no guarantee that suspending the federal gas tax would have the impact desired at the fuel pump.

“Federal motor fuel taxes are applied at the wholesale level. Notwithstanding an intention that any savings be passed on, there is no guarantee that reducing the federal tax by 18.4 cents per gallon will result in an 18.4 cent reduction when drivers fill their tanks,” the groups said. “There are many factors at play that will impact the price the consumer pays at the pump, including the cost of producing a barrel of oil. These costs fluctuate daily.”

That 18.4 cents-per-gallon federal gas tax, unchanged since 1993, currently represents less than 4 percent of the average retail price of a gallon of gas. In 1993, it represented 17 percent of the average retail price of a gallon of gas in 1993.

Even still, the federal gas tax is a vital funding tool for transportation infrastructure projects across the country. In his statement advocating for a federal gas tax holiday, Biden called on Congress—who would have to put the measure forward to a vote—to also make sure a gas tax holiday has “no negative effect on the Highway Trust Fund.”

Biden also called on state and local governments to do more to suspend their own gas taxes, as some states have already done.

In response to the administration’s latest call for a federal gas tax suspension, AASHTO once again warned against such a measure.

“While AASHTO certainly understands the desire to ease the financial burden on individuals and families across the country, suspending the federal gas tax will not come close to resolving the problem,” said Jim Tymon, AASHTO executive director, in a statement.

“Suspending the gas tax will jeopardize critical funding for roads, bridges, transit systems, and bike and pedestrian facilities upon which we all depend,” he continued.

“At a time when states have mobilized to deliver on the historic investment made possible through the Infrastructure Investment and Jobs Act, our communities cannot afford to lose out on dollars that support projects that make them safer, improve their quality of life, and support the local and national economy,” Tymon noted.