Opposition to President Donald Trump’s plan for a gas tax holiday to ease cost-of-living concerns comes not only from his political enemies, but also from the Republican-leaning trucking and construction industries.
Those industries rely heavily on road and transportation infrastructure projects funded by gas and diesel taxes.
“A gas tax holiday is a great way to blow a hole in revenue collection to fund highway and transportation maintenance, but it’s a bad way to help drivers affected by high gas prices,” said Brian Turmail, national spokesman for the Associated General Contractors of America, a construction industry trade group.
Gas prices have risen nearly 50% since the Iran war began on February 28, hitting $4.50 a liter on Tuesday, according to AAA. Diesel, used in trucks and construction equipment, is $5.64 a litre. Iran has largely blocked the Strait of Hormuz, through which one-fifth of the world’s land fat he usually walks.
Trump on Monday floated the idea of a gas tax holiday, though any such move would require action from Congress, which has sole authority over federal taxes. Republican lawmakers followed Trump’s proposal by introducing legislation that would allow for a temporary suspension of the state’s 18.4-cent per gallon gas tax and 24.4-cent diesel tax.
The state gas tax primarily funds the Highway Trust Fund, which is used for highway construction, maintenance, public transportation and infrastructure projects. That money is important to certain industries, including trucking and construction, that rely on state roads or are contracted to complete infrastructure projects.
Opponents of the gas tax holidays — including a group of three truckers who spoke out against the proposal Monday — argue that consumers end up saving less money as the temporary suspension is implemented at the wholesale level. Instead of providing relief, standing still could deplete the Highway Trust Fund.
“Without replacement funds, fuel tax revenue that supports critical investments in highway safety and infrastructure projects will disappear, preventing the safe and efficient movement of people and goods across the country,” wrote the American Trucking Associations, Truckload Carriers Association and National Tank Truck Carriers.
Other Congressional Democrats have offered similar arguments, saying the gas tax holiday would be a drop in the bucket for consumers and that the only real way to lower gas prices is to end the war with Iran.
“Eighteen cents per gallon gas tax cut doesn’t even come close to the $1.50 gas price hike in this war, and Republicans need to stop pretending,” Senate Minority Leader Chuck Schumer, D-N.Y., said on the Senate floor Tuesday. “Giving Americans real cents on the dollar to offset rising gas prices won’t cut it — 18 cents is not $1.50.”
Budget hawks may also be wary of Trump’s plan to cut the gas tax. And the national debt is back in the news after surpassing 100% of GDP in early May.
Even a temporary moratorium on the gas tax could be expensive. The Committee on a Responsible Federal Budget in March that a three-month holiday without adding an alternative source of federal revenue would add $10.5 billion to that deficit.
In Congress, the gas tax issue does not break cleanly along party lines.
Some Republicans rushed to support Trump’s proposal. Rep. Anna Paulina Luna, R-Fla., said Monday she would introduce legislation to stop the gas tax, though she did not provide details. And Sen. Josh Hawley, R-Mo., introduced a bill that would suspend the gas tax for at least 90 days.
And a number of Democrats are open to the idea.
James Talarico, a member of the Texas state House and a Democratic candidate for the US Senate, last month called for a temporary moratorium on the state’s gas tax. And ranking member of the House Budget Committee Rep. Brendan Boyle, D-Pa., introduced legislation this year that would freeze the state gas tax whenever the national average exceeds $4 per gallon.
But even some Republicans seem skeptical.
“The gas tax does pay for highways and bridges, so if you stop it, then you don’t have money going into the highway trust fund. But as a temporary measure, I can live with it,” said Sen. John Cornyn, R-Texas, on Tuesday.
Sen. John Hoeven, RN.D., similarly said he could live with a temporary gas tax holiday, but he’s more focused on opening the Strait of Hormuz. “Because that’s what will bring down the price of gas very quickly and in a very significant way,” said Hoeven.
Senate Majority Leader John Thune, RS.D., told reporters Tuesday that he has opposed past efforts to freeze the gas tax, such as when President Joe Biden proposed a similar measure in 2022 when prices rose following Russia’s invasion of Ukraine.
“If you’ve raised that, does that end up going to the consumer, the customer, the buyer out there, or does it go somewhere somewhere?” Thune said. “I think those are all fair questions to ask, but it’s a conversation I think we’re willing to have, and I’m certainly willing to hear the president’s arguments.
– CNBC’s Emily Wilkins again Karen Sloan contributed to this story.
Correction: This article has been updated to correct a quote from Sen. John Cornyn.
