Congress mulls tax holiday as fuel prices climb
Lawmakers weigh consumer relief against lost revenue as oil disruptions drive prices higher
WASHINGTON (Gray DC) - Lawmakers on Capitol Hill are debating whether relief for consumers is worth the lost revenue from suspending the federal gas tax.
Industry experts say the savings from a tax holiday amount to a drop in the bucket.
President Donald Trump said he is open to suspending the federal gas tax indefinitely.
“Until it’s appropriate. You know, it’s a small percentage, but it’s still money,” Trump said.
Missouri Senator Josh Hawley introduced a plan to scrape the tax, which runs at 18.4 percent for gas and 24.4 cents for diesel.
Patrick De Haan, GasBuddy.com’s head of petroleum analysis, said the plan would amount to a 2.9 percent discount on gas.
“And I don’t think most Americans get excited to clip a coupon for 2.9 percent off, but it’s something,” De Haan said.
De Haan said as long as oil traffic is disrupted in the Persian Gulf’s Strait of Hormuz, the U.S. will continue exporting oil to fill the void, elevating prices for Americans.
“It will continue climbing. Maybe not every day. Maybe not every week. But a majority of the weeks going forward until the strait is re-opened,” De Haan said.
He forecasts gas prices to break the records set in 2022 by the Fourth of July if the situation in the Persian Gulf remains the same.
“Diesel prices in some states have hit new all-time records, and in other areas new diesel records will likely be set. Gasoline records could also be set soon,” De Haan said.
Both chambers of Congress would need to pass the gas tax holiday.
De Haan estimates the move would cost the Federal Highway Trust Fund about 2.1 billion dollars a month in revenue.
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