Here's Why Biden's Tax Holiday Is Too Little Too Late:

By Jacob Taylor | Saturday, 25 June 2022 12:00 PM
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Here's Why Biden's Tax Holiday Is Too Little Too Late:

As President Joe Biden calls for a halt in the federal gasoline tax, he is facing doubt that the act would provide vital progress for people at the pump.

At 18.4 cents per gallon, ending the federal gas tax would take a small chunk out of increasing prices, which have reached $5 per gallon in recent weeks. The White House had weighed a tax holiday in February as gasoline prices rose to nearly $3.50 per gallon before shelving the idea.

However, with prices increasing even further, Biden is now looking at a temporary three-month pause in the tax, calling on Congress and states to suspend their levies. Senior administration officials previewed the Wednesday decision as the latest effort to “blunt the impact of Putin’s price hike” ahead of the summer driving season.

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The official said coordinated actions by the federal government, states, the energy industry, and retailers “could drop prices at the pump by up to $1 a gallon or more.”

Asked to account for the $1 deduction, the official said it is “not meant to be overly precise,” adding that Biden “won't speak to it as a precise figure.”

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“The idea is to give a sense of the magnitude of the relief that could be provided if people heeded all of the president's calls to action,” she said.

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Biden’s press secretary dismissed skepticism of the tax holiday as a “gimmick,” as Barack Obama called it while running for president in 2008. Speaking to reporters Tuesday, Karine Jean-Pierre said Biden was basically answering reporters when he said over the weekend that the tax holiday was back on the table.

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“He was asked a question yesterday, and he answered it,” Jean-Pierre said of Biden.

“He’s going to do everything that he can to make sure that he relieves some pain and pressure that Americans are feeling at the pump,” she added.

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Still, the consequences for discontented consumers are likely to prove trivial, said Michael McKenna, a Republican energy lobbyist.

“The substantive outcomes of a suspension of the federal gas tax are pretty clear — the wholesalers, the retailers, and the consumers are going to split the benefit in some fashion. So consumers might see as much as a nickel reduction per gallon,” McKenna, a White House official during the Trump administration, told the Washington Examiner. “Not nothing but not much either.”

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Worse, the slight reprieve would push demand while doing little to increase supply.

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“Consumers will barely notice it,” said Bob McNally, a former energy official in the Bush administration. “The degree the consumer does benefit, it would only support demand, which is keeping prices high.”

Revenue from the gas tax helps fund the Highway Trust Fund, which pays for improvements to roads and bridges and is already short on funding. Suspending the tax would sap the fund.

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