A proposal to suspend the federal gas tax through the end of the year has been met with nearly universal criticism from transportation groups, who argue it would undermine the new infrastructure law.
The gas tax bill, introduced by six Senate Democrats — four facing reelection in November — would cut the excise tax on gasoline produced, imported or sold from 18.4 cents per gallon to zero until Jan. 1, 2023.
It would apply only to the federal gas tax, but not to the 24.4 cents per gallon tax on diesel used for trucks, buses and boats, so those in the supply chain industry would not see cost cuts.
Senate Minority Leader Mitch McConnell Thursday blasted that omission, saying not including diesel was “a slap in the face to truckers and a further burden on the supply chain.”
He called the proposal “half-baked,” and noted that the proposed suspension would expire “right after the midterms, as soon as the next Congress is sworn in.”
Still, Senate Democrats are serious enough about the proposal to have discussed it during a caucus lunch this week, with Majority Leader Charles E. Schumer saying it was “one of . . . many things that we’re looking at.” He stopped short, however, of promising a vote on it.
But other Democrats were open to the idea, with Senate Finance Chairman Ron Wyden, D-Ore., complaining that the gas tax is “very regressive” tax.
The proposal comes from several Democrats staring down reelection races this fall: Sens. Mark Kelly of Arizona, Raphael Warnock of Georgia, Catherine Cortez Masto of Nevada and Maggie Hassan of New Hampshire. Sens. Debbie Stabenow of Michigan and Jacky Rosen of Nevada are also co-sponsors.
The senators argued that lowering the price of gas would help offset the impact of inflation on consumers. “Hardworking Georgians being squeezed at the pump understand that every penny counts,” Warnock said.
But transportation groups blasted the plan.
Ed Mortimer, vice president of transportation and infrastructure at the U.S. Chamber of Commerce, called the proposal “a temporary stunt that . . . has no promise of actually helping lower prices for consumers or improving the economy.”
Bill Sullivan, executive vice president for advocacy for the American Trucking Associations, said the relief “seems driven by short-term political interest and poorly targeted to relieve the drivers of fuel and other inflation.”
National Stone, Sand & Gravel Association President and CEO Michael Johnson, meanwhile, called it a “gimmick.”
The federal gas tax, last increased in 1993, comprises about 90 percent of revenue to the Highway Trust Fund, which pays for highways and transit, according to Susan Howard, director of policy and government relations for the American Association of State Highway and Transportation Officials.
But as cars have become more fuel-efficient and the tax has remained unchanged, the fund has lost its buying power.
According to the Government Accountability Office, the federal government has had to transfer more than $270 billion in general revenues to the Highway Trust Fund between 2008 and 2021.
The infrastructure law passed last year, Howard said, would transfer $118 billion from the general fund.
“We’re all sympathetic to the inflationary concerns,” she said. “But this isn’t a solution that will have much, if any, impact on consumers.”
While the bill declares the sense of Congress that consumers immediately get the benefit of the tax cut and says the Treasury Secretary “may use all applicable authorities” to make sure the benefits go to consumers, she said it doesn’t appear to include a mechanism to enforce such a provision.
Rep. Peter A. DeFazio, D-Ore., chairman of the House Transportation and Infrastructure Committee, said he expected oil companies “will add the forgone federal tax to their coffers in whole or part.”
“Suspending the 18.4 cents per gallon federal gas tax is not going to give consumers significant relief—if any at all,” he said. “But suspending the tax will blow a $26 billion hole in the highway trust fund this year and cause further delay in rebuilding our decrepit infrastructure and the tens of thousands of jobs that investment would have provided.”
The American Road and Transportation Builders Association, meanwhile, cited a 2020 study from the Transportation Investment Advocacy Center finding that of 29 states that increased or decreased their gas tax between 2013 and 2018, one-third of that change was passed through to customers on the day that change took effect, with no significant impact after that.
President and CEO David Bauer, in a Feb. 9 letter to Senate leadership opposing the plan, wrote that suspending the gas tax could set a precedent that could ultimately torpedo the long-held notion that the users of highways are the ones to pay for them.
Beth Osborne, director of the pro-transit Transportation for America, said the idea of gas tax holidays is nothing new — both Hillary Clinton and John McCain floated it in the 2008 presidential election, only to have Barack Obama dismiss it.
That’s because even if the gas stations didn’t absorb the cut by increasing costs, it would have minimal effect. For someone who bought, say, 20 gallons of gas a week, would save about $3.60, she said.
“To go to someone struggling to buy food and give them $3.60 a week is not a serious attempt,” she said.
The larger problem, she said, is that the trust fund no longer does what it’s designed to do — and no one is willing to address that fact.
“If we’re not committed to paying for it, then maybe it’s not that big a priority,” she said. “If we’re not going to raise gas taxes and now we’re going to repeal it willy-nilly in a way that does no good for the American people, let’s just stop pretending we want to pay for anything with the gas tax and treat it like every single other program and make it fight for its funding every year.”
Lindsey McPherson contributed to this report.