President Donald Trump's proposal to suspend the federal gasoline tax would result in billions of dollars in lost revenue each month, according to independent budget analysts. The plan, announced Monday, would eliminate the 18.4 cents per gallon federal tax on gasoline for an unspecified period.
Revenue Impact
The Committee for a Responsible Federal Budget estimates the holiday would cost the government approximately US$3.5 billion monthly in lost gasoline and diesel tax revenue. While about US$1 billion of that would be offset by increased economic activity, additional debt service costs from a larger deficit would negate those gains.
Legislative Action
Senator Josh Hawley (R-MO) introduced legislation to suspend the gas and diesel taxes for 90 days, with an option for Trump to extend by another three months if economic conditions warrant. Hawley stated, "American workers and families deserve immediate relief."
The Bipartisan Policy Center offered a separate analysis, projecting US$2.5 billion monthly in lost gasoline tax revenue and US$900 million from diesel taxes. Director Andrew Lautz questioned the benefit to consumers, noting that while filling a sedan now costs US$18-25 more than before the Iran conflict, the tax holiday would save only about US$2 per fill-up.
Trump acknowledged the limited consumer savings, saying, "It's a small percentage but it's still money." The federal gas tax funds the Highway Trust Fund, which supports interstate road construction and repairs. Suspending the tax would require congressional approval.
