ASCE strongly opposes legislation that would create federal gas tax holiday


What does the gas tax pay for?

In a demonstration of strong opposition to a bill that would suspend the federal gas tax, ASCE joined a group of transportation industry partners in sending a letter urging members of the Senate and House of Representatives to reject the legislation.

Introduced by Sens. Mark Kelly (D-AZ) and Maggie Hassan (D-NH) on February 9th, the Gas Prices Relief Act (S.3609) would suspend the current 18.4 cents-per-gallon federal gasoline tax until January 1, 2023. ASCE opposes the legislation, as the federal fuel tax serves as a reliable federal revenue source for communities to fix and modernize their roads, bridges, and transit systems.

The federal fuel tax supports the Highway Trust Fund (HTF), which offers vital support to road, bridge, and transit projects. Taking a gas tax ‘holiday’ – even for a temporary amount of time – would result in an estimated loss of over $20 billion from the HTF. This, in turn, would deal a serious blow to the new bipartisan infrastructure bill at a crucial time when Americans are expecting improvements to the nation’s roads, bridges, and transit systems that rely on that funding for maintenance and repair.

Pain at the pump vs. fixing America’s infrastructure

ASCE’s 2021 Report Card for America’s Infrastructure reflects an urgent need for capital improvements across the country’s transportation systems. The report card graded the nation’s roads a “D,” bridges a “C,” and transit a “D-.”

The federal gas tax legislation is meant to address concerns about inflation and the rising cost of gasoline. The bill intends to backfill the significant losses to the HTF with a transfer from the General Fund, further adding to the deficit.

self healing asphalt

As Senate Democrats begin debating ideas for legislation designed to cut costs for Americans with inflation driving up costs for gasoline, food, and other necessities, S. 3609 could be included in a larger economic package. The bill has been referred to the Senate Finance Committee and companion legislation is expected shortly in the House.

While ASCE recognizes that the bill sounds enticing to American families impacted by inflation, Congress knows that a variety of factors, including supply and demand, affect the gas prices at fuel stations. This legislation’s attempt to deliver economic relief to Americans is misguided and won’t achieve the intended outcomes.

Furthermore, the bill includes little guarantee that motorists will see any real relief at the pump, as oil producers have, in the past, benefited significantly from previous state-level gas tax holidays. There is no mechanism to ensure that savings are passed on to consumers, but there is a virtual guarantee of disrupting transportation dollars and the HTF.

The real impact of a federal gas tax holiday

Ultimately, suspending the federal gas tax now sets a fiscally irresponsible precedent that the gas tax should not be collected when fuel prices are high. Additionally, undoing the gas tax “holiday” will be difficult once enacted, especially if fuel prices have not come down, further threatening the largest source of revenue for the HTF.

ASCE believes now is the time to build on the momentum of the bipartisan infrastructure law and take significant steps to revitalize our aging transportation infrastructure, improve public safety, and create well-paying local jobs.

Any legislation suspending the federal gas tax is a major step backward and threatens the work that Congress and the Administration put into place with the enactment of the infrastructure bill last year.

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