President Joe Biden this week called for a three-month federal gas tax holiday to help alleviate the impact of rising inflation.
This would unfortunately equate to nearly $10 billion in lost revenues for the Highway Trust Fund. (Although the administration asserts that would be collected from other sources.) Like revenues from state fuel taxes, revenues from federal fuel taxes help fund infrastructure throughout the country like roads, highways and bridges. (The federal government taxes gasoline at 18.4 cents per gallon and diesel at 24 cents per gallon.)
The Indiana Chamber echoes the sentiments made this week by Sen. Todd Young (R-IN):
“President Biden’s proposal is like applying a band-aid to a gaping wound. A gas tax holiday would have a very short-term impact without actually increasing our energy supply. Consumers will respond by purchasing more gasoline, which will cause prices to rise, and ultimately there will be little benefit to families struggling with high fuel costs.
“The real solution to lower gas prices for Hoosier families is to increase oil supply right now and encourage domestic energy production for the future. The Biden Administration needs to turn away from its ideological green agenda and support policies that unleash American energy production.”
This follows calls in May from Hoosier legislators and political interests to suspend the state’s fuel tax.
Indiana Chamber President and CEO Kevin Brinegar urged caution on that as well, noting the decision can’t be made in a vacuum without understanding the consequences:
“Suspending the tax will reduce the price at the pump but what’s the tradeoff? That’s the question that needs to be asked and considered because ultimately not paying the tax will cost us all much more when it impacts our road conditions. And that will happen since road maintenance in Indiana is paid for exclusively with state and federal fuel taxes.
“About 90% of the federal fuel tax collected is returned to Indiana via matching funds to help with interstate road and bridge projects. But if Indiana suspends its fuel tax, there is nothing to match from the federal government. So no money will be collected and available for the state’s roadways.
“At the root of the fuel issue and rising costs is the nation’s reluctance to increase petroleum production and instead rely on volatile nations. That’s what desperately needs to be examined and is where action must be taken. That message is one we will keep conveying to our Congressional delegation and state lawmakers and officials.”
