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

President Trump called for a temporary waiver of the federal gas tax, which costs drivers 18.4 cents per gallon. Gas tax relief is being considered as voters face higher gasoline prices tied to oil market disruption from the war with Iran. A national gas tax holiday would require Congress to pass legislation. Lawmakers have introduced bills before the proposal, but passage is uncertain. Advocates say tax holidays provide quick relief, while critics argue they are costly and may be counterproductive. At most, waiving the tax would save $2.76 on a 15-gallon fill-up, compared with a national average price of $4.46. Savings could be reduced if some of the benefit is absorbed by suppliers or if prices rise, especially during shorter holidays.

"President Trump has called for a temporary waiver of the federal gas tax, which costs drivers 18.4 cents per gallon. It's one of several attempts to relieve pain at the pump as voters grow increasingly frustrated with gasoline prices, which have hit four-year highs thanks to the oil trade disruption triggered by the war with Iran. A national gas tax holiday would require an act of Congress."

"At most, waiving the tax would save drivers 18.4 cents per gallon, or $2.76 on a 15-gallon fill-up. The national average price for a gallon of gasoline is now $4.46, up from around $3 prewar, so the relief would make up for only a fraction of that price spike. But there are two reasons that drivers might save even less."

"First, some of the tax savings might instead go toward refineries and gas stations. That's especially true for a shorter holiday, says Kent Smetters, the faculty director at the Penn Wharton Budget Model, which researches the cost of public policies. "What we generally think is that over long periods of time, most of the tax cut would go to consumers," he says. "But over shorter periods of time, suppliers even though it's fairly competitive to sell gas they still have some market power.""

"And that market power means they could hike their prices a little bit, eating into those tax savings and keeping some of the benefit for themselves. Penn Wharton estimates that about 13.2 cents a gallon in savings would actually re"

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