WASHINGTON — President Joe Biden’s latest attempt to combat soaring gas prices may come to nothing.
Biden urged lawmakers on Wednesday to suspend gasoline and diesel taxes at both the federal and state levels for at least three months in hopes of providing direct relief to consumers from rising prices at the pump.
But any tax exemptions would have to be approved by Congress, where even some Democrats were cool about the idea, and by state legislatures. While some states have already moved to temporarily suspend their gas taxes, Arizona isn’t one of them — and likely won’t adopt the president’s plan.
“A White House, desperate to do something about rising inflation, has hatched a plan that may not even cut gas costs,” said Gov. Doug Ducey’s adviser, CJ Karamargin, in a statement. “What’s the point? Not even senior members of the President’s own party are on board.”
House Speaker Nancy Pelosi, D-Calif., who earlier this year called a gas tax holiday “very showbiz,” responded to Biden’s plan by citing recent House bills targeting price cuts by oil companies and saying she would wait to see “where the consensus lies on a way forward” on the White House plan.
Senate Minority Leader Mitch McConnell, R-Ky., was more outspoken, saying Biden’s “big new idea is a dumb proposal.”
Biden’s plan comes at a time when Americans are facing record high prices at the pump. AAA said Arizona residents paid an average of $5.34 for a gallon of regular gasoline Thursday, compared to the national average of $4.94 for the day.
“I fully understand that a gas tax holiday alone will not solve the problem,” Biden said during his speech on Wednesday. “But it will bring immediate relief to families – just a little breathing room – as we continue to work to bring prices down over the long term.”
Arizona taxes gasoline at 19 cents per gallon and diesel at 27 cents, both relatively low compared to other states. That’s in addition to state fuel taxes of 18 cents per gallon on gasoline and 24 cents per gallon on diesel.
Those taxes go to the Highway User Revenue Fund, which supports, among other things, capital improvements and other construction projects for 97 cities and towns and 15 counties, according to the Arizona Department of Transportation.
According to ADOT, the state tax brings in about $823 million a year and costs the average Arizona motorist about $103 a year. A 90-day moratorium on these taxes would save motorists about $25 and cost the state nearly $206 million.
Biden said governments could afford the revenue losses that a gas tax break would entail without sacrificing the infrastructure they typically pay taxes on. He said tax collections have risen and the federal deficit has fallen while federal pandemic assistance has “bolstered state budgets” over the past two years.
“With tax revenues increasing this year and our deficit falling by over $1.6 trillion this year alone, we’ll still be able to fix our freeways and lower gas prices,” Biden said. “We can do both at the same time.”
Critics called the plan a gimmick, and Karamargin said it was “hard to take this proposal seriously”.
“While policymakers seem to recognize the impact of rising energy costs on American families, some continue to turn to short-term solutions rather than long-term solutions,” Frank Macchiarola, the American Petroleum Institute’s senior vice president of policy, economics and regulatory affairs, said in one Explanation.
MP Andy Biggs, R-Gilbert, does not believe the tax stay will help lower gas prices in the short or long term.
“Biden’s gas tax break will do little for Americans,” Biggs said in a tweet. “It’s too little, too late.”
However, some states have already turned to gas tax holidays. Maryland, Georgia and Connecticut temporarily suspended gasoline and diesel taxes earlier this year. New York is nearly two months into its six-month motor fuel tax suspension. Florida will apply a fuel tax exemption in October.
And some members of the Arizona congressional delegation have embraced similar ideas.
Sen. Mark Kelly, D-Ariz., introduced the Gas Price Relief Act that would reduce the federal gasoline tax rate to zero for the remainder of 2022, and Rep. Tom O’Halleran, D-Sedona, sponsored an accompanying law A house. Both bills were introduced in February, but neither has had a hearing.
Both Kelly’s and O’Halleran’s bills direct the Treasury Department to transfer money from the general fund to the Highway Trust Fund to make up for lost tax revenue, a plan Biden agrees to. O’Halleran said he not only supports the White House plan, he thinks it should be extended.
“Arizonanes in our district drive more than most to get to school, work and the doctor, some more than 100 miles a day,” O’Halleran said in a statement on Biden’s plan. “This gas tax suspension would put money right back in their pockets, reduce shipping costs and help address inflation – I encourage the President to extend his request for the suspension until the end of this year.”