Transportation, labor, business, environmental groups object to Biden gas tax holiday proposal

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President Joe Biden asked Congress on Wednesday to suspend the federal tax on gasoline and diesel fuel for three months as gas prices hover near $5 a gallon on average across the country and inflation in the US increased another 1% in May, an 8.6% increase over May 2021. But the plan has already received pushback from both sides of the aisle and from prominent non-governmental organizations.

“Suspending the gas tax will not provide significant relief for consumers — it will instead subsidize the largest and most profitable industry on the planet,” the National Association of City Transportation Officials said in an emailed statement.

The Americans for Transportation Mobility coalition and the Transportation Construction Coalition, in a letter sent Wednesday to the White House, expressed their opposition as well. Pointing to the impact the proposed gas tax holiday would have on funding for the Highway Trust Fund, the letter said that it “would very likely hurt efforts to improve the safety and condition of our roads, bridges, and transit systems.” The coalitions include the American Public Transportation Association, American Trucking Associations and the US Chamber of Commerce along with steel, coal and paving trade groups and labor organizations.

Rep. Peter DeFazio, D-Ore., chair of the House Transportation and Infrastructure Committee, said in a statement that “this policy would at best achieve only minuscule relief while blowing a $10 billion dollar hole in the Highway Trust Fund.”

According to the White House statement, Biden “believes that we can afford to suspend the gas tax to help consumers while using other revenues to make the Highway Trust Fund whole for the roughly $10 billion cost.”

Senate Minority Leader Mitch McConnell, in a statement, pointed out a recent study of past gas tax holidays that found less than 20% of the cut gets reflected at the pump; Thus, lifting the 18.4-cent gas tax would cost consumers just 3 or 4 cents less per gallon.

Urban Institute’s Yonah Freemark, a senior research associate in its Metropolitan Housing and Communities Policy Center, criticized the idea on Twitter:

Biden also asked state and local governments to provide additional consumer relief. In California, where the gas excise tax of 51 cents per gallon is set to rise to 54 cents on July 1, state legislators are debating a gas tax suspension. Connecticut suspended its fuel tax through the end of this month, while New York halted fuel taxes from June 1 to Dec. 31.

Many environmental leaders oppose federal and state moves to halt gas taxes. Sierra Club Legislative Director Melinda Pierce said in a statement These actions are “little more than yet another subsidy for the fossil fuel industry.”

Congress should instead pass tax credits for electric vehicles, according to Lisa Frank America’s Washington, DC Environment office executive director. And Matt Casale, environment campaigns director at the US Public Interest Research Group, said in a statement that “we need more than a gas tax holiday — we need real transportation solutions that do not further deepen our dependence on cars and oil over the long haul.”

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