Biden’s proposed federal tax cut on gas could cost dearly in the future
America’s hard-pressed drivers may be about to receive a holiday. On Wednesday Joe Biden called on Congress to suspend the federal tax on gas and diesel until September as the country struggles with soaraway costs at the pump. But experts warned the tax holiday is unlikely to have a major impact on prices and will probably further harm the US’s already battered roads and bridges. If the tax cut even gets passed.
Blaming Russia’s invasion of Ukraine for the surge in gas prices Biden proposed cutting the 18-cents-a-gallon federal taxes on fuel until September and called on states to cut their gas taxes too. “Together, these actions could help drop the price at the pump by up to $1 a gallon or more. It doesn’t reduce all the pain, but it will be a big help,” said Biden.
The tax cut’s first obstacle may be its last. The Senate Republican leader, Mitch McConnell, called the plan an “ineffective stunt” and other critics in his own party may join Republicans in blocking any cut.
But with prices still soaring and midterm elections looming the administration is increasingly looking for ways to spare the public from prices at the pump, currently averaging at just under $5 a gallon.
The non-partisan Tax Foundation called the plan a “uniquely ill-suited policy for addressing rising prices”. Pointing out that the money from the tax is the primary funding source for highway construction and its suspension could cost $10bn in funding.
“Anything that could help the price at the pump is good, but it’ll come at a significant cost to the federal government that supposedly uses that money for the highway fund to maintain highways,” said Mark Finley, fellow in energy and global oil at the center for energy studies at Rice University.
US energy
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