Biden Asks for a Gas Tax Break. Here’s What That Means
The Biden administration wants to cut out the federal gas tax for 90 days beginning next month.
Federal officials are looking for ways to reduce pain at the pump as prices soar to all-time highs and Americans get ready for a busy July 4 travel season. U.S. President Joe Biden announced his administration will seek a suspension of the federal gas tax Wednesday in an attempt to reduce the burdens of rising gas prices. Regardless of whether the tax suspension makes it through Congress, AAA is forecasting a record number of Americans are about to drive for their Fourth of July holiday weekend, despite higher costs.
The proposed tax suspension would be for three months, from shortly before the July 4 travel weekend through September. The tax itself is a relatively small part of gas costs—currently, the federal gasoline tax is 18.4 cents per gallon (24.4 cents per gallon for diesel)—and Democratic congressional leaders have expressed skepticism that it would actually reduce costs, as oil and gas companies would likely pocket most of the potential savings. The reduction would only net about a 3.5 percent savings per gallon. There are concerns it could politically backfire, as well, by depriving the highway trust fund of an estimated $10 billion in tax revenue, though Biden publically stated that a tax suspension is "not going to have an impact on major road construction and major repairs.”
All of this comes on the heels of average fuel prices finally cresting $5 a gallon nationwide and the highest inflation rates seen in the past 40 years. The Biden administration has already tried a variety of measures intended to drive down costs, including opening up the American strategic reserves of oil and allowing higher blends of ethanol in pump gas year-round, both of which have not had a measurable impact on fuel prices.
Despite the expense of fuel, AAA still predicts that 47.9 million Americans will travel 50 miles or more on the upcoming holiday weekend, and 42 million of those travelers will drive. That is a 1.1 percent increase in drivers over 2019's pre-pandemic vacation levels. While overall travel is still slightly off from pre-pandemic highs, that primarily has stemmed from fewer people flying, which is both more expensive and harder to actually get on a plane than usual, as flight cancellations stemming from air traffic control problems and staffing issues mount. Unfortunately, by either air or land, travelers are likely going to have a frustrating time reaching their destination; AAA's forecast predicts nationwide travel times via car to increase by roughly 50 percent compared to non-holiday travel, and the TSA is recommending airline passengers arrive at airports three hours before departure to ensure they make it through security in time.
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