The national average price for gas remained above $4.50 per gallon Monday, according to AAA, with little relief on the horizon as the war with Iran remains locked in a stalemate. President Donald Trump said Monday that he would be open to suspending the national gas tax to help with the soaring costs — but it’s a proposal that would do more harm than good in the long term, while providing little immediate help for Americans draining their wallets at the pump.
Trump told CBS News on Monday that a pause on the gas tax is “a great idea” and that when the price of gas does go down, “we’ll let it phase back in.” Later that day, the president told reporters in the Oval Office that the tax would ideally be suspended until “it’s appropriate.” His comments echoed those of Energy Secretary Chris Wright, who told NBC News on Sunday that “all measures that can be taken to lower the price at the pump and lower the prices for Americans, this administration is in support of.”
Just because an idea is bipartisan doesn’t make it a good one.
At present, the federal gas tax adds on 18.4 cents per gallon of regular gasoline, 19.3 cents per gallon for planes and jet fuel and 24.4 cents per gallon on diesel fuel. The money collected goes directly to the Highway Trust Fund, a pool of funding used to pay for federal highway construction and maintenance. But however much Trump would like to temporarily wipe out this tax, only an act of Congress can alter the federal gas tax rate, even to temporarily pause its collection.
Notably, Trump isn’t the first person to think that pausing the tax is a potential political win — and it’s a policy proposal that has crossed political lines. Former Sens. Hillary Clinton, D-N.Y., and John McCain, R-Ariz., proposed a “gas tax holiday” during their presidential nomination bids back in 2008. Former President Joe Biden also called on Congress to pass a suspension back in 2022, as soaring inflation threatened Democrats ahead of the midterms.
The last time a gas tax suspension was under consideration, it was Republicans who were against the pause, mostly to deny any political cover for Biden. This time around, Trump’s backing might shift the dynamic. Senate Democrats already introduced a bill in March to suspend the gas tax until Oct. 1. After Trump’s comments, Rep. Anna Paulina Luna, R-Fla., jumped on board Monday to say that she would be introducing her own proposal as well.
But just because an idea is bipartisan doesn’t make it a good one.
Consider that the original proposal from Clinton and McCain was panned, in part because, as Reuters reported at the time, “since refineries cannot increase their supply of gasoline in the space of a few summer months, lower prices will just boost demand and the benefits will flow to oil companies, not consumers.” If put into place today, one economist suggested that a gas tax holiday would only save drivers roughly 60 cents total per trip to the pump, a drop in the tank compared to the $1.50 per gallon leap we’ve seen since Trump launched the Iran war more than two months ago.
If anything, the federal gas tax is already too low. As the Bipartisan Policy Center recently noted, funding for the HTF is already lagging. The fixed amount was last raised since 1993 and hasn’t changed with rising inflation or increased fuel efficiency from cars requiring less gas to fill up a tank. Last year, the fund ran a deficit of nearly $13 billion, according to the Congressional Research Service, with the fund likely to run out entirely by 2028.
The federal gas tax is also far lower than the taxes most states impose. Several states have either put their own pause into place or are considering one, but run the risk of backlash if the holiday ends before the Iran crisis ends.
There’s already enough of a mania for slashing taxes when politically convenient regardless of the long-term effect.
The average price for gas in Georgia was $4.03 Monday, lower than in most of the country. That’s due in part to a law signed by Gov. Brian Kemp pausing the state’s gas tax for 60 days. Georgia’s pause ends Friday, and drivers there are already worried about what happens if the 33-cents-per-gallon tax is allowed to snap back into place.
Meanwhile, the funds diverted from the HTF wouldn’t all flow directly back into consumers’ pockets. A 2022 estimate from the University of Pennsylvania’s Wharton School found that pauses in state fuel taxes that year only partially went to consumers, with the rest going to corporations. The same is likely true at the federal level, given that gas wholesalers pay the tax up front and gas stations aren’t reaping the same benefits as the major oil companies, leaving them less likely to slash prices by too much.
Graham Platner, a candidate for the Democratic Senate nomination in Maine, has called on eliminating the current federal gas tax altogether and funding highway maintenance with increased taxes on billionaires — but that isn’t exactly likely to fly under the current GOP-controlled Congress.
While I’m all for reducing America’s overreliance on cars to get around, leaving the highways to crumble with no alternative doesn’t seem like the most sound long-term idea.
Yes, as progressives rightly point out, the gas tax is regressive and affects the poorest Americans the most harshly. But there’s already enough of a mania for slashing taxes when politically convenient regardless of the long-term effect. With gas prices likely to remain elevated until next year at the soonest without a sudden change of heart from Iran to open the Strait of Hormuz, a pause in the gas tax could easily become permanent. By treating only the symptom, the disease itself would be allowed to fester, leaving gas prices painfully high and letting politicians off the hook.
Hayes Brown is a writer and editor for MS NOW. He focuses on politics and policymaking at the federal level, including Congress and the White House.