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Gas tax pause proposed in Senate

By |  February 17, 2022
The federal tax on gasoline has not changed since 1993. Photo: Willard/ iStock / Getty Images Plus/Getty Images

The federal tax on gasoline has not changed since 1993. Photo: Willard/iStock / Getty Images Plus/Getty Images

Sens. Mark Kelly (D-Arizona) and Maggie Hassan (D-New Hampshire) introduced the Gas Prices Relief Act, a bill aimed at lowering gas prices by suspending the federal gas tax for the rest of 2022.

The federal gas tax rate is currently 18.4 cents per gallon, and it has remained at that level since 1993. Revenue from the gas tax goes into the Highway Trust Fund (HTF), which helps cover costs for highway construction projects and public transit.

According to the Committee for a Responsible Federal Budget (CRFB), a nonpartisan, nonprofit organization committed to educating the public on issues with significant fiscal policy impact, revenue from the gas tax is estimated to be $42 billion this year. Should the bill go into effect in March and last through the year, revenue would decrease by $20 billion.

According to text in the Gas Prices Relief Act, the HTF would still be funded but my moving money over from the general fund.

While the federal bill does not address state gas taxes, which range from 14.98 cents per gallon to 66.98 cents per gallon, Kelly says the bill would provide relief to families amid increasing costs. According to the American Automobile Association, the average gas price per gallon is now at $3.50 – a dollar higher than the same time in 2021.

“Arizonans are paying some of the highest prices for gas we have seen in years, and it’s putting a strain on families who need to fill up the tank to get to work and school,” Kelly says. “This bill will lower gas prices by suspending the federal gas tax through the end of the year to help Arizona families struggling with high costs for everything from gas to groceries.”

The bill also tasks the treasury secretary with ensuring that oil and gas companies pass cost savings on to consumers.

“People are feeling a real pinch on everyday goods, and we must do more to help address rising costs, particularly the price of gas,” Hassan says. “We need to continue to think creatively about how we can find new ways to bring down costs, and this bill would do exactly that, making a tangible difference for workers and families.”

The bill is co-sponsored by Sens. Debbie Stabenow (D-Michigan), Catherine Cortez Masto (D-Nevada), Raphael Warnock (D-Georgia) and Jackie Rosen (D-Nevada).

Opposition

Following the bill’s introduction, Michael Johnson, president of the National Stone, Sand & Gravel Association (NSSGA), expressed his opposition to the proposed gas tax holiday.

Johnson says a gas tax holiday would increase debt financing and bring greater uncertainty to the solvency of the surface transportation system.

“It’s no secret the method for funding our federal Highway Trust Fund needs reform,” Johnson says. “For years, NSSGA has been calling on Congress to address the growing solvency issues and ensure that common sense, sustainable measures are in place to fund critical infrastructure projects. NSSGA strongly opposes legislation that suspends or halts the collection of the current gas tax.”

CRFB echoed Johnson’s concerns about the solvency of the HTF. The committee says without the general revenue transfer in the bill, insolvency of the HTF would move from fiscal year 2027 to fiscal year 2026.

“While the gas tax holiday may reduce prices at the pump, it will further increase demand for gasoline and other goods and services at a time when the economy has little capacity to absorb it,” the committee says in a statement. “The result could be even higher rates of inflation in 2023.

“With the Highway Trust fund currently just five years from insolvency, lawmakers should not pursue policies that would widen the gap between dedicated revenue coming into the trust fund and spending coming out of it, while using one-time general revenue transfers to make up the difference,” CRFB adds. “Instead, they should pursue trust fund solutions to close the structural imbalance between Highway Trust Fund spending and revenue.”

In a letter to Congress from NSSGA, Johnson refers to the Gas Prices Relief Act as short-sighted and says there is no guarantee any cost savings will be passed along to consumers.

“We appreciate the commitment of lawmakers who want to find legislative solutions that reduce the burden of increased gas prices on American families and businesses,” Johnson says. “The global pandemic, supply chain crisis and drastic inflationary pressures have impacted America’s aggregates producers who are also faced with shortages and increased operation costs.

“However,” Johnson adds, “temporarily reducing the federal user fee on fuel will not yield savings for families and, instead, risks bringing more turmoil to the men and women who build and use our infrastructure.”

Jack Kopanski

About the Author:

Jack Kopanski is the Managing Editor of Pit & Quarry and Editor-in-Chief of Portable Plants. Kopanski can be reached at 216-706-3756 or jkopanski@northcoastmedia.net.

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