White House announces proposal for federal gas tax holiday to ease prices

The White House released a fact sheet announcing that President Joe Biden would call for a federal gas tax holiday. The proposal, which President Biden had said he was considering earlier this week, comes about a week after the national average topped $5 per gallon for the first time ever.

According to the fact sheet, the proposed federal gas tax holiday would last for three months. Biden is also calling on states to suspend their own gas taxes.

“President Biden understands that a gas tax holiday alone will not, on its own, relieve the run up in costs that we’ve seen,” the White House said in the fact sheet. “But the President believes that 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.”

Currently, there is an 18.4 cents-per-gallon federal tax on gas and a 24.4 cents-per-gallon federal tax on diesel fuel. According to the White House, the money raised from the taxes “fund critical highways and public transportation through the Highway Trust Fund.”

On Tuesday, Biden was asked if the federal gas tax holiday would be worth potential losses for the fund. Biden said it was, citing the bipartisan infrastructure law Congress passed last year.

“Look, it will have some impact,” Biden said. “But it’s not going to have an impact on major road construction and major repairs.”

It was not immediately clear if the White House has the votes in Congress to suspend the federal tax. Some members have expressed reservations, even within the Democratic party. Many economists view the idea of a gas tax holiday with skepticism.

“If oil prices start going down, and the price you pay at the pump starts going down, then maybe if this should pass, this holiday might have a bit of a tailwind. But it might not,” James Pethokoukis, an economic policy analyst at the American Enterprise Institute, told CNBC Wednesday. “If demand goes up, there might not be much of a change at all. Then the president will look very ineffective, and I don’t know if voters will give him lots of credit.”

The Associated Press contributed to this report.