Tuesday, May 28, 2024
HomeEconomyPresident Biden's Gas Tax Suspension: A Temporary Band-Aid or Effective Policy?

President Biden’s Gas Tax Suspension: A Temporary Band-Aid or Effective Policy?

As the midterms approach, President Joe Biden has proposed a three-month federal gas tax suspension in an effort to save consumers money on expensive fuel prices. This suspension of taxes would take 18 cents off the top of every gallon of gasoline and 24 cents off diesel fuel, amounting to a potential 3.6% savings for consumers. The move is one of several measures taken by the administration as the global oil supply is throttled by Russia’s actions in Ukraine, including waiving a ban on higher ethanol blends and releasing oil from the nation’s strategic reserve.

The proposal has raised some questions among policymakers, such as whether or not it will be an effective solution to temporarily relieve drivers from high gas prices or if it could pose a problem for key policy focuses such as infrastructure and climate change. To answer this question, we must first understand how much impact this tax holiday would have on individual wallets and then consider what effect it may have on other areas of policy.

When looking at the cost savings that this policy could provide, experts say that the impact on household budgets would actually be quite small – potentially only 5 or 10 cents per gallon off their total bill at the pump. Although this could add up to significant savings over time for those who drive frequently, it does not appear that this tax holiday would greatly reduce Americans’ expenditures on fuel in any meaningful way.

What’s more concerning is how these policies may affect two key focus areas of legislation: infrastructure and climate change. From an infrastructure perspective, these taxes fill up the Highway Trust Fund which pays for road maintenance across America; therefore suspending them could create cash flow issues down the line when repairs are needed but there is no funding available. As far as climate change goes, cheaper gas could mean more people driving – especially those already driving inefficient vehicles – which would lead to higher emissions levels overall and accelerate global warming trends further.

At present, there are too many unknowns for us to make a definitive call about whether President Biden’s proposed gas tax suspension will be an effective solution or just act as a band-aid until after the midterm elections. However, it does appear that while consumers may experience modest savings at most from this policy, other areas related to its implementation could put us at risk for long-term problems if we are not careful about how we proceed moving forward.