President Joe Biden is calling on Congress to suspend the federal gas tax for three months, to provide direct relief to American consumers who have been hit with what he calls “Putin’s Price Hike.”
The White House is also calling on states to take similar action to provide some direct relief, whether suspending their own gas taxes or helping consumers in other ways, according to a fact sheet.
“The price of gas is up dramatically around the world, and by almost $2 per gallon in America, since Putin began amassing troops on the border of Ukraine. President Biden understands that high gas prices pose a significant challenge for working families,” according to the fact sheet.
The move would suspend the federal taxes which stand at 18 cents per gallon of gasoline and at 24 cents per gallon of diesel. The taxes fund highways and public transportation, through the Highway Trust Fund. The White House said it believes it can afford the $10 billion cost to suspend the gas tax to help consumers while using other revenues to make the Highway Trust Fund whole.
“But in this unique moment, with gas prices near $5 a gallon on average across the country, President Biden is calling on Congress to suspend the gas tax for three months – until the end of September – to give Americans a little extra breathing room as they deal with the effects of Putin’s war in Ukraine,” according to the fact sheet.
The White House added that while the “gas tax holiday” alone will not, on its own, relieve the run-up in costs, “at this unique moment when the war in Ukraine is imposing costs on American families, Congress should do what it can to provide working families breathing room.”
CNBC reports that if the gas savings were fully passed along to consumers, people would save 3.6% at the pump when prices are averaging about $5 a gallon across the nation.
Inflation heated up in May, increasing 8.6% for the 12-months — the largest 12 months increase since December 1981, according to the Consumer Price Index (CPI) data released on June 10. While the increase was broad-based, it’s notable that the energy index rose 34.6% over the past 12 months, while gas rose 48.7%. The Russian-Ukraine war has been putting pressure on gas prices, which have been soaring in the past weeks. This, experts say, will continue to drive inflation and in turn, affect prices across the entire economy — with no quick end in sight, as GOBankingRates previously reported.
Indeed, several analysts agree that air, land and sea shipments have all become more expensive as a result of record oil and gasoline costs, and that these increases in costs have been shifted to consumers, which is one of the primary drivers of inflation.
Mark Zandi, chief economist at Moody’s Analytics, also believes that most of the 8.6% inflation stems from higher commodity prices due to Russia’s invasion and continued disruptions from the pandemic, according to CNBC.
“In the immediate near term, it is critical to stem the increase in oil prices,” Zandi said last week, according to CNBC.
The White House said that the administration is engaging with oil and refining companies to ask them to work with the Administration to bring forward concrete solutions that increase refinery capacity, and that Energy Secretary Jennifer Granholm will meet with these CEOs this week.
On June 21, Chevron’s CEO wrote a letter to the president, saying that “We can only meet these challenges by working together. Chevron will engage in this week’s meeting with Secretary Granholm. I encourage you to also send your senior advisors to this meeting, so they too can engage in a robust conversation. Your “whole of government” philosophy in addressing major issues should apply here too, as a comprehensive approach is best to address the energy needs of our nation and of our allies.”
The president is facing opposition-even from members of his own party — who don’t view the tax suspension as an effective solution.
Following the announcement, Sen. Tom Carper (D-Del.) tweeted:
“I’m glad that @POTUS is exploring ways to lower gas prices at the pump. Still, suspending the primary way that we pay for infrastructure projects on our roads is a shortsighted and inefficient way to provide relief. We should explore other options for lowering energy costs.”
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This article originally appeared on GOBankingRates.com: Biden Calls on Congress to Suspend Federal Gas Tax