Interest in a gasoline tax holiday is growing on Capitol Hill following President Donald Trump’s endorsement Monday — but the proposal is also facing pushback from some key Republicans balking at cutting a major source of federal funding.
High energy prices stemming from the ongoing conflict in the Middle East prompted Trump to suggest pausing fuel tax collections “till it’s appropriate.” He said, “It’s a small percentage, but it’s still money.”
Sen. Josh Hawley (R-Mo.) released legislation Monday that would suspend both the 18-cent gasoline tax and the 24-cent diesel tax for 90 days. Rep. Anna Paulina Luna (R-Fla.) said she would soon follow with a House bill.
But Sen. James Lankford (R-Okla.), who chairs the Senate Finance subcommittee with jurisdiction over energy issues, said Monday evening he would not support a suspension of the federal gas tax “right now,” citing the federal debt and deficit.
“Even if we pass something right now, it would take a long time to be able to work through the process, but we’ve got to pay attention to our debt as well,” Lankford said in an interview.
Pushing through a gas tax holiday would be a first for Congress. When then-President Joe Biden pitched a holiday in 2022 as prices at the pump increased to record highs in the months following Russia’s invasion of Ukraine, Democratic leaders opted not to move that effort forward.
Republican Senate Majority Leader John Thune (R-S.D.) was lukewarm when asked for his take. “I’ve not in the past, obviously, been a fan of that idea,” Thune told reporters. “But, you know, I’ve got some colleagues out there who think it’s a good idea, and so we’ll hear them out.”
House Republican leaders are currently discussing how to handle Trump’s push, according to three people familiar with the talks and granted anonymity to speak candidly. They had hoped the administration could find a way to act on its own in a limited manner, the people said, but it’s looking unlikely at this point.
Senate Minority Leader Chuck Schumer (D-N.Y.) reacted to the proposal by slamming the president’s decision to attack Iran but didn’t reject the idea of a tax holiday.
“Let’s not pretend 18 cents of gas tax relief per gallon makes up for the damage created with this war,” Schumer said on the Senate floor. “Eighteen cents isn’t [$1.50], which is how much the price of gas has gone up since this war started.”
Cost concerns
The federal gasoline tax is the main funding source for the Highway Trust Fund, which has been on life support for decades, and some lawmakers are looking to shore up through a new fee on electric cars and hybrids.
House Transportation and Infrastructure Chair Sam Graves (R-Mo.) — who is working on a new highway bill — last month told POLITICO he opposed a gas tax holiday. His office did not respond to requests for comment on the policy Monday.
Suspending the gas tax, said Sen. Thom Tillis (R-N.C.), is “not a good long-term strategy” and “just creates more work for us on the Highway Trust Fund.” “We’ve already got a Highway Trust Fund that doesn’t have enough money,” Tillis said in an interview.
But Hawley’s bill — and legislation from Sens. Mark Kelly (D-Ariz.) and Richard Blumenthal (D-Conn.) and Rep. Chris Pappas (D-N.H.) — would use general fund dollars to make up for revenue losses from a fuel tax holiday.
Doing that, however, may anger budget hawks. Fiscal conservative Sen. Rick Scott (R-Fla.) said Monday, “I’ll cut every tax you can, but I’d like to balance the budget, too.”
Late last month, the Bipartisan Policy Center projected that a five-month suspension of the gas tax would increase federal deficits by about $12 billion.
Senate Republicans Cynthia Lummis of Wyoming, Jim Justice of West Virginia and Tom Cotton of Arkansas all welcomed Trump’s proposal Monday. Sen. John Hoeven of North Dakota said he’d also consider it but maintained that such a measure might not be necessary because the current spike in gas prices was “temporary.”
Prices at the pump were averaging $4.52 nationally as of Monday, according to AAA, up more than 40 percent from a year ago. Though that average price has stayed about the same in recent days, prolonged conflict could drive up the cost per gallon near the $5.01 all-time record set in June 2022.
Pappas told POLITICO he hadn’t spoken directly with Democratic House leadership about his bill. A holiday is “gaining some steam right now,” he said. “We’ve got some more work to do to, I think, get members on both sides of the aisle bought in.”
Riley Rogerson and Jordain Carney contributed to this report.
