Donald Trump Moves To Suspend Federal Gasoline Tax Amid Iran War Fuel Price Surge

President Donald Trump said Monday he will move to suspend the federal tax on gasoline to help Americans shoulder surging fuel prices caused by the Iran war, but the president cannot suspend the federal tax on his own and Congress would have to approve it.

“Congress would have to approve the move.”

AP News

The AP reported that as of Monday the average national gas price was $4.52 a gallon, and it said the federal tax is currently set at 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel.

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Trump told reporters in the Oval Office that “It’s a small percentage, but it’s, you know, it’s still money,” and he said “Until it’s appropriate.”

The proposal is framed as temporary relief while negotiations to end the war remain stuck, with the federal gas tax paying into the Highway Trust Fund for improvements to roads and public transportation.

Politico said Trump’s gas tax holiday pitch faces early Capitol Hill headwinds even as the proposal has bipartisan backers, because some key Republicans balk at cutting a major source of federal funding.

Sen. Josh Hawley released legislation Monday that would suspend both the 18-cent gasoline tax and the 24-cent diesel tax for 90 days, while Sen. James Lankford said Monday evening he would not support a suspension of the federal gas tax “right now,” citing the federal debt and deficit.

ABC News

Politico also quoted Senate Minority Leader Chuck Schumer on the Senate floor, saying, “Let’s not pretend 18 cents of gas tax relief per gallon makes up for the damage created with this war,” and it reported that Republican Senate Majority Leader John Thune was lukewarm when asked about the idea.

Axios reported that the White House told Axios last week that a suspension was not “currently under consideration,” before Trump endorsed it to CBS as a period of time “and when gas goes down, we’ll let it phase back in,” while noting that suspending the 18.4 cent-per-gallon tax would require Congress.

The debate over a federal gas tax suspension is tied to the Highway Trust Fund, with CNN saying pausing the 18.4-cent-per-gallon levy on gas and the 24.4-cent-per-gallon tax on diesel won’t do much to relieve drivers’ pain and could wind up pushing up prices more.

“the actual benefit to consumers is going to be pretty small”

CNN

CNN reported that if the federal levy is suspended, gas prices will fall an average of 13.2 cents a gallon and the cost of diesel will decline by 14.6 cents a gallon, and it quoted Kent Smetters saying, “The actual benefit to consumers is going to be pretty small.”

Al Jazeera reported that Trump said he would suspend the 18-cent federal tax on petrol to offset surging prices and that he did not specify an end date, while it also said suspending a federal tax requires an act of the US Congress.

As lawmakers weigh bills, the stakes include the Highway Trust Fund’s revenue gap, with CNN saying a five-month suspension would reduce revenue by about $17 billion, or 46% of total gas tax revenue projected to flow to the fund this fiscal year.