President Donald Trump’s proposal to temporarily suspend an 18-cent-per-gallon federal gas tax won’t do much to eliminate a big surge in pump prices since the Iran war began, a leading fuel industry analyst said.
“Washington is debating suspending the 18.4¢ federal gas tax. But no one is talking about the real tax Americans are paying: the Iran war premium,” Patrick de Haan, head of petroleum analysis at GasBuddy, said in an X-post. “Adding about $1.35 per gallon right now, the cost to drivers today alone is about $571 million. In 71 days? About $28 billion.”
Trump said in a telephone interview with a CBS News reporter that he thought it would be a “great idea” to temporarily remove the gas tax.
Trump said, “Yes, we’re going to remove the gas tax for a period of time, and when the gas comes down, we’ll phase it back in.”
The push to suspend the federal gas tax comes after the average price of gas reached $4.50 on May 12, according to AAA. That’s higher than the national average of $2.98 as of Feb. 28, the day the United States first launched military strikes against Iran.
How are lawmakers reacting to Trump’s proposal?
Trump cannot unilaterally suspend the federal gas tax because it was authorized by Congress. Suspension or elimination of the federal gas tax would require another Act of Congress.
At least one lawmaker, Senator Josh Hawley (R-MO), said he planned to introduce legislation on May 11 that would suspend the federal gas tax. Additionally, a pair of Democratic senators also introduced legislation on March 13 calling for suspending the federal gas tax until October 1.
“This legislation temporarily suspends the federal gas tax, reducing high gas prices, saving consumers from the squeeze and providing much-needed financial relief to American families,” said Senator Richard Blumenthal (D-CT), co-author of the Democratic gas tax holiday bill.
The Alliance for Automotive Innovation, the largest lobbying group for car makers in Washington, also recently came out in support of eliminating the federal gas tax in favor of a new vehicle fee based on the weight of cars.
How much is the federal gas tax?
The federal government has been collecting a tax on every gas purchase made at a US station since the 1930s. The current rate of 18.4 cents per gallon was established by a law passed by Congress in 1993. Transportation funding advocates have lamented the fact that Congress has not taken action to increase the gas tax in more than three decades.
The federal gas tax was first established in 1932 at a rate of 1 cent per gallon. Congress has approved increases several times since then, and some lawmakers have called for tying the tax to inflation as votes to raise taxes have become politically difficult.
What is gas tax money used for?
The gas tax is typically authorized by Congress each time it adopts a federal highway funding bill. The revenue it generates funds the Department of Transportation’s Highway Trust Fund, which is distributed to states to help pay for road and transit construction projects.
As cars have become more fuel-efficient and more drivers have opted for electric vehicles and hybrids, the government has collected less revenue despite increased road use. Lawmakers are looking for ways to close the growing gap in federal gas-tax revenue.
Which states have the highest gas taxes?
On top of the 18-percent federal gas tax, each state adds its own local gas tax. Here are the top 10 states with the highest combined gas taxes and their current average pump prices:
1. California
- Gas tax: 71 cents per gallon
- May 12 gas price average: $6.15
2. Illinois
- Gas tax: 66 cents per gallon
- May 12 gas price average: $4.97
3. Washington
- Gas tax: 59 cents per gallon
- May 12 gas price average: $5.76
4. Pennsylvania
- Gas tax: 59 cents per gallon
- May 12 gas price average: $4.66
5. Indiana
- Gas tax: 55 cents per gallon
- May 12 gas price average: $4.31
6. Michigan
- Gas tax: 48 cents per gallon
- May 12 gas price average: $4.71
7. Maryland
- Gas tax: 46 cents per gallon
- May 12 gas price average: $4.45
8. New Jersey
- Gas tax: 45 cents per gallon
- May 12 gas price average: $4.52
9. Virginia
- Gas tax: 42 cents per gallon
- May 12 gas price average: $4.28
10. Rhode Island
- Gas tax: 41 cents per gallon
- May 12 gas price average: $4.48