Image Source: Fox Business
President Biden has proposed that gas tax holiday be given to the American public as a way to reduce the effect and the hardship the continued hike in petrol and gas prices nationwide. President Biden proposed that the holiday be given for three months.
Compared to a year ago, the average price of a gallon of gasoline, also known as petrol, has increased to around $5 (£4). President Biden is under pressure to react because there will be national congressional elections in November. However, according to analysts, the cost of household gasoline and diesel would be little affected by eliminating the fee.
The political support for the gas tax holiday, which would require a congressional act, is also in doubt since members of President Biden’s party are worried that it will disproportionately benefit oil and gas companies. While acknowledging the criticism, the White House urged officials to attempt to lessen the burden on families.
According to the administration’s statement, a gas tax holiday won’t be enough to stop the cost increase we’ve experienced.
Congress should do everything in its power to provide working families some breathing room at this particular time when the war in Ukraine costs American households.
Why President Biden is proposing a tax holiday
Currently, the US levies a tax on gasoline and diesel of about 18 cents and 24 cents per gallon, respectively, with the proceeds going toward funding highway improvements. The government would spend an estimated $10 billion if the charge were eliminated through September, as suggested by President Biden. The initiative is the newest attempt by nations worldwide to address the skyrocketing energy prices.
Since last year, oil prices have risen as demand has outpaced supply, which is being restrained by cuts that many businesses made after the epidemic struck in 2020 and caused demand to collapse. In addition, Russia is a major energy provider, and the conflict in Ukraine has forced Western nations to avoid its oil, which has added to the shortage.
The imbalance between the supply and demand of petroleum products is the root of the problem, according to a representative of the industry association American Fuel and Petrochemical Manufacturers. “Pausing the federal gas tax will undoubtedly provide near-term relief for US drivers, but it won’t solve the root of the issue,” the representative said.
According to that report, long-term strategies are required to increase US energy production. President Biden has already taken action, releasing previously unheard-of quantities of oil from the nation’s reserves and removing import duties on solar panel products. President Biden is advocating similar actions by state governments, which normally levy their taxes, often larger than those levied by the federal government, in addition to suspending the federal gasoline tax. New York is one state that has already suspended these charges.
As his criticism of the industry has grown in recent weeks, the president has also urged oil and gas companies to increase their output. The UK’s recently announced windfall tax on energy company profits provides an example of how to fund household relief. Still, the US has no political momentum for such a measure.