President Donald Trump’s plan to eliminate the gas tax to ease cost-of-living concerns is facing opposition not only from his political opponents but also from the Republican-leaning trucking and construction industries.
These industries rely heavily on road and transportation infrastructure projects funded by federal gas and diesel taxes.
“A gas tax holiday is a good way to punch a hole in revenue that funds highway and transit repairs, but it’s a bad way to help drivers affected by high gas prices,” said Brian Termeer, national spokesman for the construction industry trade group General Contractors of America.
Gasoline prices have increased about 50% since the Iran war began on February 28, hitting $4.50 a gallon on Tuesday, according to AAA. Diesel, which is used in trucks and construction equipment, is expensive at $5.64 per gallon. Iran has largely blocked the Strait of Hormuz, through which one-fifth of the world’s countries pass. oil I travel normally.
President Trump floated the idea of repealing the gas tax on Monday, but such a move would require action from Congress, which has sole authority over federal taxation. Following President Trump’s proposal, Republican lawmakers have introduced a bill that would suspend the federal gas tax of 18.4 cents per gallon and the federal diesel tax of 24.4 cents per gallon.
The federal gasoline tax primarily funds the Highway Trust Fund, which uses funds for federal highway construction, maintenance, public transportation, and infrastructure projects. That funding is critical for certain industries that rely on federal highways or are contracted to complete infrastructure projects, such as trucking and construction.
Opponents of the gas tax moratorium, including three trucking groups that voiced their opposition to the proposal on Monday, argue that consumers would save little because the moratorium would be implemented at the wholesale level. Instead of providing relief, the moratorium could deplete the Highway Trust Fund.
“Without replacement funding, fuel tax revenues that support critical investments in highway safety and infrastructure projects will evaporate, hampering the safe and efficient movement of people and goods across the country,” wrote the American Trucking Associations, Trucking Associations, and National Tanker Trucking Associations.
Some Congressional Democrats have made similar arguments, arguing that eliminating the gas tax 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.
“An 18-cent-per-gallon gas tax cut doesn’t even come close to the $1.50 gas price increase from this war, and Republicans need to stop pretending that’s the case,” Senate Minority Leader Chuck Schumer, D-N.Y., said on the Senate floor Tuesday. “Giving Americans literal pennies in dollars to deal with rising gas prices will not reduce it. 18 cents is not $1.50.”
Budget hawks could also complicate President Trump’s plan to cut gas taxes. And the national debt, which exceeded 100% of GDP in early May, is in the news again.
Even a short-term gas tax suspension can cost a lot of money. The Committee for a Responsible Federal Budget estimated in March that a three-month holiday without additional federal resources could increase the budget deficit by $10.5 billion.
In Congress, the gasoline tax issue has not been clearly resolved along partisan lines.
Some Republicans rushed to support Trump’s proposal. Rep. Anna Paulina Luna (R-Florida) said Monday she would introduce a bill to suspend the federal gas tax, but did not provide details. And Sen. Josh Hawley (R-Missouri) has introduced a bill that would suspend gas taxes for at least 90 days.
And a few Democrats are open to the idea.
James Talarico, a Texas congressman and Democratic candidate for the U.S. Senate, called for a moratorium on the federal gas tax last month. And Rep. Brendan Boyle (D-Pennsylvania), the ranking member on the House Budget Committee, introduced a bill this year that would suspend the federal gas tax if the national average exceeds $4 a gallon.
But even some Republicans seemed skeptical.
Sen. John Cornyn (R-Texas) said Tuesday that “the gas tax pays for highways and bridges, and stopping it would mean no money goes into the Highway Trust Fund. But as a temporary measure, it’s bearable.”
Sen. John Hoeven (D) similarly said he could get by with a temporary suspension of gas taxes, but was more focused on opening the Strait of Hormuz. “Because that would be the fastest and most significant reduction in gas prices,” Hoeven said.
Senate Majority Leader John Thune (R-Pa.) told reporters Tuesday that he has opposed past attempts to suspend the federal gasoline tax, including when President Joe Biden proposed a similar measure in 2022, when prices soared in the wake of Russia’s invasion of Ukraine.
“If we lift it, will it ultimately get passed on to the consumer, customer, purchaser, or will it be absorbed somewhere in the supply chain?” Thun said. “I think these are all legitimate questions to ask, but it’s a conversation that we’re willing to have and I think we’re ready to hear the president’s arguments.
— CNBC’s Emily Wilkins and Karen Sloan contributed to this article.
Correction: This article has been updated to correct a quote from Sen. John Cornyn.
