PUMP RELIEF NEXT? Trump Weighs Suspending Federal Gas Tax as States Move to Slash Fuel Costs
President Donald Trump said Tuesday that his administration is considering suspending the federal gasoline tax as part of a widening effort to bring down sharply elevated fuel prices, potentially putting another 18.4 cents per gallon back in motorists’ pockets.
“We’re thinking about that,” Trump told reporters at the White House when asked whether he would support suspending the federal gas tax.
Any nationwide gas-tax holiday would require congressional action, meaning Trump cannot simply eliminate the levy through an executive order. That presents an immediate obstacle: neither the House nor Senate is currently scheduled to return to Washington until after the Nov. 3 midterm elections.
The federal government currently collects an excise tax of 18.4 cents on each gallon of gasoline and 24.4 cents on each gallon of diesel. The revenue is primarily directed toward the Highway Trust Fund, which finances highway, bridge and public-transit projects around the country.
Trump did not say Tuesday how long a federal gas-tax suspension might last or provide details about legislation he would support. But the idea comes as the administration faces growing pressure to reduce energy costs following months of steep increases at the pump.
The national average for regular gasoline stood at roughly $4.37 per gallon Tuesday, up from about $3.13 a year earlier. Diesel remained even more expensive, averaging approximately $6.32 per gallon — nearly twice the $3.68 motorists were paying at the same point last year.
The current diesel average is down somewhat from the record $6.53 reached on Sept. 22, but the extraordinarily high cost continues to reverberate throughout the economy. Because diesel powers much of the nation’s trucking, agricultural and freight industries, increases in diesel prices can ultimately work their way into the prices consumers pay for food and other goods.
Energy prices have risen amid severe disruptions to global fuel supplies, including the war with Iran and Ukrainian strikes against Russian oil refineries. Tight refining capacity and constrained global diesel supplies have added further pressure.
Trump has repeatedly said he expects fuel prices to decline as his administration takes additional steps to increase supplies and reduce costs. Speaking Tuesday, he said, “Prices are now coming way down.”
“And oil, as soon as the war is over, which will be soon, will be coming way down,” Trump said.
The possible federal gas-tax holiday follows a separate action Trump took Monday targeting diesel prices. The president signed an executive order temporarily expanding highway access to red-dyed diesel, fuel that ordinarily is restricted to off-road uses such as farming and construction and therefore is not subject to the same federal excise tax at the point of sale.
“Today, I am announcing another unprecedented step to bring down costs. For many years, farm vehicles, construction equipment, and other off-road vehicles have used what is known as ‘red dye’ diesel… which is exactly the same as normal diesel, but is sold tax-free for off-road vehicles and big trucks… Tonight, I am going to sign a historic Executive Order to officially waive the off-road requirement and allow anyone to purchase tax-free red dye diesel for any reason,” Trump said while announcing the action in Nebraska.
The order applies from Oct. 5 through Dec. 31 and directs the Treasury Department to determine how it can defer federal excise-tax payments associated with the highway use of dyed diesel without penalties or interest. It also directs Treasury to explore ways, including legislation, to ultimately eliminate the obligation to pay those deferred taxes.
The administration says eliminating the 24.4-cent federal diesel tax from a 250-gallon fill could save roughly $60. If states take corresponding action on their own taxes, the White House says savings could exceed $100 on a large fill-up.
The order also directs federal officials to work with states, fuel distributors, agricultural cooperatives and industry groups to expand access to dyed diesel, particularly in areas experiencing heavy demand. The Department of Agriculture was instructed to work specifically on ensuring supplies are available to farmers.
Trump’s moves come alongside an international effort to increase fuel supplies. G-7 countries — including the United States, United Kingdom, France, Germany, Italy, Canada and Japan — agreed last week to release a combined 100 million barrels of oil and diesel from strategic reserves in an effort to push prices downward.
At the same time, states have increasingly begun acting on their own rather than waiting for Washington, with both Republican and Democratic officials taking steps to soften the impact of higher fuel costs.
Ohio Gov. Mike DeWine signed legislation temporarily eliminating the state’s 38.5-cent-per-gallon gasoline tax and 47-cent diesel tax through Dec. 31. The measure won bipartisan support after high fuel prices became a major concern across the state.
Utah Gov. Spencer Cox moved to reduce his state’s fuel taxes by 6 cents per gallon through the end of the year.
Georgia Gov. Brian Kemp suspended the state’s gasoline tax of roughly 33 cents per gallon and its diesel tax of roughly 37 cents, with the current suspension scheduled to continue through at least Oct. 29.
Indiana Gov. Mike Braun has also taken aggressive action, suspending the state’s 7% gasoline use tax along with its 37-cent-per-gallon gasoline excise tax. The combined move is estimated to save Indiana drivers roughly 59 to 61 cents per gallon at current prices.
Indiana’s 63-cent-per-gallon diesel tax remains in place, although Braun has expanded access to red-dyed diesel in an effort to provide relief to farmers and other eligible users.
Kentucky Gov. Andy Beshear, a Democrat, took a different approach, pausing automatic inflation-based adjustments that otherwise would have increased the state’s fuel taxes.
The growing state-level movement has added pressure on Washington to consider similar relief. Sen. Josh Hawley of Missouri has proposed legislation that would suspend the federal gasoline tax and the underground-storage-tank fee for 90 days, with authority for the president to extend the suspension for an additional 90 days if economic conditions warrant it.
Sen. Bernie Moreno of Ohio has likewise called for federal action following his state’s decision to suspend its own fuel taxes.
A federal gas-tax holiday, however, would raise questions about how to replace revenue normally deposited into the Highway Trust Fund. The gasoline and diesel excise taxes together generate tens of billions of dollars annually for transportation infrastructure, meaning Congress would have to decide whether to replace the lost revenue from another source or allow the fund to absorb the reduction.
There is also debate over how much of a tax reduction would ultimately reach motorists. Supporters argue that eliminating the tax would provide immediate relief at the pump, while critics contend that during periods of tight fuel supply, some portion of the savings could be absorbed elsewhere in the supply chain rather than passed entirely to consumers.
For now, Trump has stopped short of formally endorsing a specific federal gas-tax holiday proposal. But his acknowledgement Tuesday that the administration is actively considering the idea represents the latest step in an increasingly broad campaign — from strategic-reserve releases and expanded dyed-diesel access to state tax holidays and potentially a nationwide federal tax suspension — aimed at bringing fuel prices down.
{Matzav.com}
