Gasoline Tax Holiday ‘Worth Considering,’ Yellen Says

Ms. Yellen’s comments come as several states, including Connecticut and Maryland, have completed plans to temporarily halt gasoline taxes at the state level. But in the U.S. Congress, Democratic-led efforts to temporarily stop collecting the federal gasoline tax of 18.4 cents a gallon have yet to gain traction.

Across the world, fuel prices have surged following Russia’s invasion of Ukraine, which disrupted the global oil market. Rising oil prices along with increased demand as the summer driving season kicks off have driven the average cost of a gallon of unleaded fuel in the U.S. to $4.98 on Sunday, according to AAA. That is up from about $3 a year ago.

Coalitions of construction and business interests and labor groups say gasoline-tax decreases don’t necessarily lead to consumer relief since they don’t prevent retailers from raising base prices—and may encourage them to do so. They also say state and federal gasoline-tax decreases could jeopardize much-needed road and bridge improvements, including projects to be funded by last year’s $1 trillion bipartisan infrastructure law.

Harvard University’s Lawrence Summers, a former Treasury secretary, criticized the idea on Sunday as a “gimmick…you eventually have to reverse,” speaking on NBC’s “Meet the Press.” Meaningful steps to address inflation, he said, would include lowering drug prices by giving Medicare the power to negotiate with pharmaceutical companies.

Medicare is a federal health insurance program for people who are 65 and older or have specific disabilities

Brian Deese, who heads the White House’s National Economic Council, listed several items the administration is targeting to fight inflation—prescription drug prices, utility costs, tax reform, semiconductor supply, Chinese tariffs—but didn’t mention a federal gasoline tax holiday.

“Prices are unacceptably high right now and that’s why the president has said we need to make this our top economic focus,” he said on CBS’ “Face the Nation.”

The gasoline-tax issue cuts across traditional partisan politics, with both Republicans and Democrats at the state level supporting various relief measures.

In the U.S. House and Senate, however, Republican leaders largely oppose suspending the federal gasoline tax. Senate Minority Leader Mitch McConnell (R., Ky.) has accused Democrats of playing “political games,” noting that any gasoline-tax relief would expire soon after midterm elections.

Write to Andrew Ackerman at [email protected]

Ms. Yellen’s comments come as several states, including Connecticut and Maryland, have completed plans to temporarily halt gasoline taxes at the state level. But in the U.S. Congress, Democratic-led efforts to temporarily stop collecting the federal gasoline tax of 18.4 cents a gallon have yet to gain traction.

Across the world, fuel prices have surged following Russia’s invasion of Ukraine, which disrupted the global oil market. Rising oil prices along with increased demand as the summer driving season kicks off have driven the average cost of a gallon of unleaded fuel in the U.S. to $4.98 on Sunday, according to AAA. That is up from about $3 a year ago.

Coalitions of construction and business interests and labor groups say gasoline-tax decreases don’t necessarily lead to consumer relief since they don’t prevent retailers from raising base prices—and may encourage them to do so. They also say state and federal gasoline-tax decreases could jeopardize much-needed road and bridge improvements, including projects to be funded by last year’s $1 trillion bipartisan infrastructure law.

Harvard University’s Lawrence Summers, a former Treasury secretary, criticized the idea on Sunday as a “gimmick…you eventually have to reverse,” speaking on NBC’s “Meet the Press.” Meaningful steps to address inflation, he said, would include lowering drug prices by giving Medicare the power to negotiate with pharmaceutical companies.

Medicare is a federal health insurance program for people who are 65 and older or have specific disabilities

Brian Deese, who heads the White House’s National Economic Council, listed several items the administration is targeting to fight inflation—prescription drug prices, utility costs, tax reform, semiconductor supply, Chinese tariffs—but didn’t mention a federal gasoline tax holiday.

“Prices are unacceptably high right now and that’s why the president has said we need to make this our top economic focus,” he said on CBS’ “Face the Nation.”

The gasoline-tax issue cuts across traditional partisan politics, with both Republicans and Democrats at the state level supporting various relief measures.

In the U.S. House and Senate, however, Republican leaders largely oppose suspending the federal gasoline tax. Senate Minority Leader Mitch McConnell (R., Ky.) has accused Democrats of playing “political games,” noting that any gasoline-tax relief would expire soon after midterm elections.

Write to Andrew Ackerman at [email protected]