Trump wants a gas tax holiday. There's a much bigger problem looming

Key Points:

• President Trump has called for a temporary waiver of the 18.4 cents per gallon federal gas tax to provide relief amid rising gasoline prices caused by oil trade disruptions linked to the Iran conflict, though such a waiver requires Congressional approval and faces political uncertainty.
• The maximum savings from a federal gas tax holiday would be 18.4 cents per gallon, roughly $2.76 on a 15-gallon fill-up, but actual consumer savings may be lower due to supplier pricing power and increased gasoline demand potentially driving prices back up.
• Waiving gas taxes reduces funding for highway construction and maintenance, as these taxes finance the Highway Trust Fund; states that paused gas taxes, like Georgia, faced significant budget shortfalls, which may worsen road conditions and increase vehicle repair costs due to potholes.
• The federal gas tax, last raised in 1993, has failed to keep pace with inflation, rising construction costs, and increased fuel efficiency, leading to a growing shortfall in highway funding that Congress currently covers with general tax revenues.
• Raising the gas tax faces political resistance and is complicated by the rise of electric vehicles, which do not pay fuel taxes despite contributing to road wear; alternative funding methods such as EV fees, mileage-based charges, congestion fees, and toll lanes are being explored but have yet to replace the gas tax system.