If savings from the 18.4 cents-a-gallon federal tax on gas are fully passed along to consumers, drivers would save about $2.76 for a 15-gallon fill-up. But many economists are wary of a gas tax holiday.
It’s unclear, though, if Biden can push his proposal through Congress, where lawmakers, including some Democrats, are skeptical or even opposed to the idea. Many economists also are wary of a gas tax holiday.
A Penn Wharton Budget Model analysis says recent suspensions of state gasoline taxes in Maryland, Georgia and Connecticut were mostly passed onto consumers in the form of lower gas prices. About 72% of tax savings in Maryland were passed onto consumers, up to 65% in Georgia and up to 87% in Connecticut, the report says.
If the holiday is extended, as some experts expect, the cost could be tens of billions higher and could jeopardize administration efforts to build and maintain roads and bridges. Rep. Peter DeFazio, D-Ore., chairman of the House Transportation and Infrastructure Committee, said he opposes the tax suspension in part because it provides minuscule relief and could become permanent. “You know what happens in this town: you suspend the tax, it’s gone forever,” he said Wednesday. “I do not want to compromise the highway trust fund. We have not raised the gas tax since 1993, and it’s worth 6 cents now compared to 1993.
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