President Biden calls for suspension of gas taxes

June 22, 2022
A gasoline pump.

… today I’m calling on Congress to suspend the federal gas tax for the next 90 days, through the busy summer season — busy travel season.

United States President Joe Biden asking Congress and the states to suspend their gas and diesel taxes for 90 days.
  • President Biden continued: "Here's what that means: Every time you go to the gas station to fill your tank, the federal government charges an 18-cent tax per gallon of gas that you purchase and a 24-cent tax per gallon of diesel you purchase. It's a tax that's been around for 90 years." Context: The price of 18 cents has been steady since the 1990s.
  • President Biden also called on states to suspend their gas tax "or find other ways to deliver some relief," listing some states that have already taken action: "In Connecticut and New York, the governors have temporarily suspended their gas tax as well."
  • How would this be paid for? Typically, the federal gas tax goes toward the Highway Trust Fund, which is used for American highways and mass transit. However, Pres. Biden said that the government will be able to suspend the federal gas tax "without" affecting the Fund due to tax revenues being up this year and "our deficit down over $1.6 trillion this year alone …" However, others disagree. Patrick DeHaan, head of petroleum analysis at GasBuddy, says it will cost the Highway Trust Fund more than $6 billion dollars.
  • Pres. Biden also urged companies to take actions that could result in lower prices for consumers, including refining more oil and accepting a lower profit margin.
    • Something To Consider: Many believe that even if a gas tax holiday were to be passed, it might not actually provide much benefit to consumers. Reuters explains: "Temporarily reducing fuel prices, for example, could simply boost demand by leading drivers to consider longer trips and avoid car-pooling and mass transit. That, in turn, could mean prices head back to where they were, or even higher."
    • During the presidential campaign of 2008, Barack Obama called his opponent's call for a gas tax holiday a "gimmick," explaining, "The easiest thing in the world for a politician to do is tell you exactly what you want to hear." Former economic advisers to Obama, Democratic economists Larry Summers and Jason Furman, also have said this will not help consumers.
  • Important To Note: This announcement does not mean that gas and diesel taxes will be suspended. Congress must pass this proposal, and states must also choose to take action, amid criticism from both Democrats and Republicans.

Why It Matters: If Congress passes the federal tax holiday and states take similar actions, Pres. Biden said this will "provide families some immediate relief — just a little bit of breathing room — as we continue working to bring down prices for the long haul." Pres. Biden also said that if all the actions he proposed are taken, it could drop prices at the pump "by up to $1.00 a gallon or more." In summary of his proposal, he said: "I'm doing my part. I want the Congress, the states, and the industry to do their part as well."

Remarks by President Biden on Gas Prices and Putin's Price Hike (The White House Briefing Room)

Biden calls for 3-month suspension of gas and diesel taxes (Associated Press)

New York suspends gas tax for seven months as price per gallon approaches $5 (USA Today; June 1, 2022)

by Jenna Lee,