(Bloomberg) -- President Joe Biden will ask Congress to enact a three-month gasoline tax suspension, after his administration’s previous efforts failed to curb soaring pump prices that weigh heavily on his party’s political fortunes.
Biden will call for a pause in tax collections through September in a speech scheduled for 2 p.m. Wednesday in Washington, senior administration officials said. The national average gasoline price hit a record this month above $5 a gallon, even after Biden issued a historic release from US reserves earlier this year.
As part of any suspension, Biden wants to reallocate other federal funding to make up the estimated $10 billion hit to the Highway Trust Fund, which is supported primarily by gas taxes, according to the officials. They asked not to be identified as a condition of participation in a briefing for reporters.
Biden will ask that both the 18-cent-per-gallon federal tax on gasoline and the 24-cent-per-gallon tax on diesel be suspended, the officials said.
Gasoline prices, a key driver of inflation that’s hit a four-decade high, have emerged as Biden’s foremost political problem as Democrats face losing control of one or both chambers of Congress in the November midterms.
It’s unlikely Congress will heed the president and enact a gasoline tax holiday. Republicans, who control 50 seats in the Senate, are making Biden’s economic policy and his failure to curb gasoline prices and broader inflation the centerpiece of their midterm campaign. And some Democrats oppose waiving the tax out of concern the policy would undermine highway maintenance.
And House Speaker Nancy Pelosi and others have questioned whether a holiday would result in lower prices for consumers at the gas pump.
But some states have already moved to relieve motorists of gas taxes. The governors of Connecticut and New York have suspended their state taxes, while the governors of Illinois and Colorado have delayed planned tax and fee increases.
Connecticut’s gas tax holiday ends this month, while New York’s began June 1 and will extend for seven months.
In his speech, the president also will call on refiners and retailers to funnel through more savings to consumers, the officials said, the latest salvo in his brewing feud with the oil sector, which he blames for price gouging and for doing too little to maintain refining capacity in the US.
On Tuesday, Biden rebuked the chief executive of Chevron Corp. (NYSE:CVX), Mike Wirth, after Wirth published a letter calling for Biden to stop criticizing the industry and make a “change in approach” to US energy policy. Biden told reporters, “I didn’t know they’d get their feeling hurt that quickly.”
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But Biden’s administration believes that if enacted, a holiday would cut the price of gas by roughly a dollar a gallon, the officials said. The estimate includes federal gas taxes, an average of state taxes and a scenario in which refiner profit margins return to levels comparable to eras in which crude oil was less expensive.
Biden said earlier this week he was studying whether to back suspension of the 18.4 cents-per-gallon federal gasoline tax.
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On Tuesday, Biden and a top economic aide downplayed concerns often cited in opposing a gas tax holiday -- that it would curb revenues needed to maintain roadways, or that savings wouldn’t be passed on to consumers. Biden said last year’s infrastructure law can fill the gap on funding, while adviser Heather Boushey said state-level pauses already in place signal that consumers do benefit.
“We have a giant infrastructure bill we passed -- giant,” Biden said, referring to the infrastructure law last year that added $550 billion in new funding for construction of roads, airports, ports and other public works. “It’s not like before. Look, it will have some impact but it’s not going to have an impact on major road construction and major repairs.”
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