WASHINGTON — President Donald Trump said he will move to suspend the federal tax on gasoline to help Americans shoulder surging fuel prices caused by the war with Iran. The president cannot suspend the tax unilaterally, and Congress would have to approve any suspension.
The federal tax is set at 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel fuel, amounts that do not include state taxes. The levy provides more than $23 billion per year in revenue for federal highway and public transit programs, according to the American Road & Transportation Builders Association, which identifies it as the single largest source of funding for those programs.
The average national gas price stood at $4.52 per gallon as of Monday, according to AAA. That figure is 50% higher than the average of just under $3 per gallon recorded before the war with Iran.
Asked how long a suspension should last, Trump said, "Until it's appropriate." He also said, "It's still money." Trump has said that higher fuel prices are worth paying to prevent Iran from obtaining a nuclear weapon.
The Trump administration has released millions of barrels of oil from the U.S. Strategic Petroleum Reserve and temporarily lifted sanctions on some Russian and Iranian oil shipments already at sea. The U.S. is negotiating with countries reliant on Middle East crude to join a coalition to police the Strait of Hormuz, through which about one-fifth of the world's traded oil normally flows.
Energy Secretary Chris Wright said the administration was open to all ideas, including a suspension of the gas tax. Senator Josh Hawley said he will introduce legislation to suspend the tax.
Senators Richard Blumenthal and Mark Kelly sponsored a bill to suspend the federal gas tax through October 1, and Representative Chris Pappas sponsored a similar measure in the House. Blumenthal said, "Trump's war of choice with Iran is driving up gas prices across the country — and Americans shouldn't have to bear the additional economic burden of Trump's reckless decision making."
Indiana and Georgia recently suspended their state gas taxes, and Kentucky and Utah have reduced theirs. The American Road & Transportation Builders Association said proposed bills would offset any lost Highway Trust Fund revenue with general funds, and that a federal suspension could raise the deficit and jeopardize long-term investments in highway and transit programs. The association also said in a statement that studies show many retailers do not pass on the full amount of a gas tax reduction to consumers.
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