The proposal was supported by the Vice President, who asked the 50 states to suspend gas taxes for three consecutive months. The gas tax currently averages 30 cents per gallon. Because they fear that the gas tax will not generate enough revenue to maintain our highways, some states have already eliminated gas taxes.
But others fear that a federal gas tax cut will cost the national highway fund $10 billion. The Vice President encouraged service station operators and oil companies to pass on the savings to consumers.
But while Biden’s proposal is a step in the right direction, it is not enough. Prices are likely to rise this summer, as the situation is not stable. The Vice President will likely push states to adopt gas tax holidays to combat rising prices.
States like Maryland have already enacted these policies, but with limited political benefits. The White House has a limited number of options and no assurances that a gas tax holiday will lower prices by November.
The announcement by the Vice President has caused debate about how long the gas tax holiday should be. It is possible that the gas tax holiday could extend for a longer period of time, resulting in tens of billions of dollars in lost revenue. The temporary suspension of federal gas tax could result in the law’s funding mechanism being undermined.
Both Republicans and Democrats are worried about the possible consequences of suspending this tax. Further, a three-month suspension could stifle infrastructure investments.