What Would the Federal Gas Tax Freeze Mean for Car Owners?
As gasoline prices continue to rise since the start of the war in Iran, President Trump and other U.S. lawmakers have scrapped the idea of suspending an 18-cent federal gas tax to help drivers suffering from high pump prices.
Additionally, several states are considering gas tax holidays and one – Georgia – has already implemented one.
“I mean we’ve thought about it, I think,” Trump said when asked if he was considering the idea of ending the gas tax that has been collected by the federal government since the 1930s because of current high gas prices.
“But the gas tax — you know, people have talked about it,” Trump continued. “It’s something we have in our pocket if we think it’s needed.”
A pair of Democratic lawmakers in the US Senate also introduced legislation on March 13 that would have called for a moratorium on the federal gas tax until October 1 due to rising gas prices in the country.
“This legislation temporarily suspends the federal gas tax, lowers the price of gasoline that puts pressure on consumers and brings much-needed financial assistance to American families,” said Sen. Richard Blumenthal, a Democrat from Connecticut who wrote the bill.
The comments from the president and lawmakers came as the price of gasoline reached $3.99 on March 30, according to the AAA Auto Club. That’s up from the national average gas price of $2.98 in Feb. 28
How Much Gas Taxes Does the Federal Government Collect?
The federal government has been collecting taxes on all gas purchases made in the US 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 complained that Congress hasn’t moved to raise the gas tax in more than three decades.
A gas tax is often authorized by Congress each time it passes a highway funding bill because the revenue is used to fund the US Department of Transportation’s Highway Trust Fund, which is distributed to states to help pay for road construction and transportation projects.
The federal gas tax was first established in 1932 at a rate of one percent per gallon. It has been raised several times since then by Congress, and some lawmakers have called for it to be adjusted for inflation as votes to raise taxes have become politically difficult for lawmakers to pass before going before voters.
Stopping the federal gas tax would require an act of Congress since the tax collection was authorized by lawmakers in previous highway funding.
Which States Have Suspended Their Gas Tax Or Are Considering It?
Georgia became the first state to temporarily suspend its gas tax. State motorists were paying an average of $3.58 a gallon for gas as of March 30, up from $2.79 a gallon a month earlier, according to the AAA Auto Club.
Georgia was charging drivers 33 cents per gallon in gas taxes before the ban, according to the Tax Foundation. That was more than 18.4 cents per liter going to the state coffers.
The following states are considering lowering their local fuel tax rates and here are their current fuel prices and tax rates:
Utah
- March 30 average gas price: $4.20
- Current gas tax rate: 39 cents per liter
In Florida
- March 30 average gas price: $3.95
- Current gas tax rate: 39 cents per liter
Connecticut
- March 30 average gas price: $3.94
- Current gas tax rate: 25 cents per liter
in Pennsylvania
- March 30 average gas price: $3.94
- Current gas tax rate: 59 cents per gallon
USA TODAY National Correspondent Eduardo Cuevas and Senior Political Correspondent Sarah D. Wire contributed to this report.
This article first appeared in USA TODAY: What does the federal gas tax freeze mean for car owners?
Reporting by Keith Laing, USA TODAY / USA TODAY
USA TODAY Network via Reuters Connect
