For the past few months, many Americans have been adversely affected by inflated gasoline prices at the pump.
The government has attempted to lower the price of gas in several ways, including releasing 50 million barrels of oil from its Strategic Petroleum Reserve. President Biden has also proposed establishing a gas tax holiday to further alleviate the burden Americans are bearing daily.
President Biden’s proposed gas tax holiday would temporarily suspend the current federal taxes of 18 cents and 24 cents per gallon for regular gasoline and diesel fuels, respectively.
In addition, the President is urging states to contribute to this proposal by asking them to suspend their gas taxes as well, citing that the average state gas tax is approximately 30 cents per gallon, with Pennsylvania and Ohio amounts being 0.58 and 0.39 cents per gallon, respectively.
Some critics believe that while it may help consumers at the pump, eliminating both federal and state gas taxes may create problems for industry projects that rely on the aforementioned taxes for funding. For example, funds derived from gas taxes would normally be earmarked to pay for infrastructure projects across the nation. An additional concern regarding President Biden’s tax proposal is the significant amount of trust he would be giving to the oil companies to pass the savings from the tax holiday to the consumer, rather than manipulating the prices at the pump to benefit themselves.
Considering the pros and cons of President Biden’s proposed gas tax holiday and the concerns which surround the proposal, it is unlikely that the proposal will be approved by Congress, resulting in the Biden Administration having to find another solution to the inflated gasoline prices across the nation.
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The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.
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