President Joe Biden will ask Congress to suspend the federal gasoline tax for three months in a speech on Wednesday afternoon, according to a new report from the New York Times. The nationwide average for a gallon of gas recently topped $5.00, though the average in some states like Calfornia is more like $6.38 per gallon, according to the L.A. Times.
The U.S. federal government currently taxes fuel at 18 cents per gallon for gasoline and 24 cents per gallon for diesel and President Biden’s proposal to Congress would give drivers temporary price relief through September.
One of the considerations taken by the White House, according to the New York Times, is this November’s midterm elections. President Biden won’t be on the ballot, but plenty of Democrats face tough challenges. The U.S. economy is faring pretty well by just about every traditional measure, with low unemployment, rising wages, and solid growth, but inflation and soaring fuel costs are taking a huge bite out of the wallets of everyday Americans.
Biden will also encourage states to suspend their own gas taxes, which can vary widely across the country. Pennsylvania has the highest gas tax in the state, at $0.57 per gallon, while states like Florida tax gasoline at just $0.19 per gallon.
The U.S. isn’t the only country that’s tried a temporary gas tax holiday in recent months. Australia cut its federal gas tax in half from 44 cents to 22 cents per liter, which expires in September. Germany also cut taxes on fuel following Russia’s invasion of Ukraine, which has sent price shocks around the world not just on gas, but common foods.
As the New York Times points out, many economists don’t think a federal gas tax would do much to help consumers save money, since the $0.18 federal tax doesn’t rise and fall as a percentage of the total value of the gas. It’s just a flat rate that very few people will likely notice at a time when a gallon costs $5.00.
What’s to stop the oil companies from just jacking up prices even more to make up for the sudden drop that might occur during a gas tax holiday? White House officials have apparently anticipated that and have “a plan” according to the New York Times. But you’ll have to wait until Biden’s official announcement later today.