Manufacturers, transportation groups push back on Biden gas tax proposal

Lobbying groups representing manufacturers, construction contractors and civil engineers on Wednesday criticized President Biden’s proposal to suspend the federal gas tax to combat sky-high fuel prices.

The business groups argued that the effort won’t bring relief to consumers at the pump and could derail major transportation projects paid for by the Highway Trust Fund, which is funded by the gas tax.

“Our nation achieved historic progress with the Bipartisan Infrastructure Law, but this move is likely to derail its implementation by suddenly disrupting its funding, delaying critical projects that Americans desperately need and that are vital to manufacturers’ competitiveness,” National Association of Manufacturers President and CEO Jay Timmons said in a statement. 

Biden called on Congress to pass a three-month pause on the gas tax, which charges customers 18.4 cents per gallon for gas and 24.4 cents for diesel. He also called on states to suspend their gas tax. 

The White House aims to offset the loss of tax revenue with other federal funds to ensure that transportation projects continue. 

“With the tax revenues up this year and our deficit down over $1.6 trillion this year alone, we’ll still be able to fix our highways and bring down prices of gas,” Biden said Wednesday. “We can do both at the same time.” 

Still, transportation groups say that ending gas taxes could create uncertainty for highway and public transit projects by taking away a consistent source of revenue. 

The American Public Transportation Association, American Trucking Associations and dozens of other groups sent a letter to Biden on Wednesday arguing that the gas tax holiday jeopardizes “the certainty necessary for our state and local partners to plan long-term projects and the association hiring and equipment purchasing required.”

Industry opposition to the gas tax holiday could worsen its chances on Capitol Hill, where Republicans and some prominent Democrats have dismissed the idea. 

While gas prices remain sky high at around $5 a gallon nationally, the gas tax proposal would likely only bring modest relief. 

A study from the University of Pennsylvania found that suspending the gas tax from March to December would reduce per capita gasoline spending between $16 and $47. The university also found that when states suspended their gas tax, only a portion of the savings was passed down to consumers, with retailers pocketing the extra profits.