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What is a holiday on the gas tax? Janet Yellen weighs option amid pump pain

With US drivers still feeling the pinch of high gasoline prices, Treasury Secretary Janet Yellen has considered the possibility of a gas tax exemption.

A gas tax holiday, as the name suggests, would be a period when the tax levied on all gas prices is temporarily abolished, providing some measure of relief to consumers. As of now, the federal gas tax is about 18.4 cents per gallon.

Yellen discussed the current gas price situation during a Sunday appearance on ABC’s This week. When asked about the possibility of President Joe Biden introducing tax exemptions in the face of high prices, Yellen gave a somewhat affirmative but non-committal response.

“That’s an idea worth considering,” Yellen said, noting that President Biden is “ready to work with Congress” to fight gas prices.

Janet Yellen Gas Tax Holiday
Treasury Secretary Janet Yellen said Sunday a gas tax break is “an idea well worth considering” given the high fuel costs. Above is a recording of Yellen at a committee hearing in 2015.
Chip Somodevilla/Getty Images

“If Congress will work with him to implement some of the government’s programs, we can cut other costs that burden households, such as prescription drugs, health care costs, and increase the supply of affordable housing,” Yellen added.

Energy Secretary Jennifer Granholm also spoke about the possibility during a Sunday appearance on CNN’s State of the Union, going so far as to say that President Biden is actively considering the idea. However, she also noted that suspending the gas tax could affect Biden’s other key legislative goals.

“Part of the challenge with the gas tax, of course, is that it finances the roads, and we just did a big infrastructure bill to help fund the roads,” Granholm explained. “If we abolish the gas tax that takes away the funding just passed by Congress to do that.”

news week contacted the White House for comment.

In March, six governors from states such as Wisconsin, Minnesota, New Mexico and Colorado called for a pause in gas taxes as a ban on Russian oil imports pushed prices up. At the time, the national average was about $4.32 per gallon.

“At a time when people are directly impacted by rising prices for everyday goods, a federal gas tax vacation is a toolbox tool for lowering costs for Americans, and we urge you to give full consideration to this proposed legislation.” said the state leaders. wrote in a letter to Congress.

A bill was also introduced in March by Democratic Rep. Adam Schiff that would put a gas tax break through the end of 2023. It was last said on Sunday that it had been “referred to the Commission on Manners and Means”.

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