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Unit87's avatar

A-I:

The maximum theoretical savings would be:

18.4¢ per gallon on gasoline.

A 15-gallon fill-up would save about $2.76.

Someone using 50 gallons per month would save about $9.20 per month.

In practice, economists often note that not every penny of a tax reduction necessarily reaches consumers because fuel prices are influenced by refinery capacity, inventories, seasonal demand, and competition among retailers. The actual pump-price reduction could be somewhat less than the full 18.4¢. That part is a market question rather than a tax question.

For 3 months

The federal government collects about $25 billion annually from the gasoline excise tax. A three-month suspension would therefore reduce revenue by roughly one-quarter of that amount, on the order of $6 billion.

Direct effects:

Slightly lower fuel costs for drivers.

Reduced revenue flowing into the Highway Trust Fund.

Little immediate effect on road construction because most projects are funded and planned years in advance.

For 6 months

A six-month suspension would be roughly double that revenue loss, around $12 billion to $13 billion based on annual gasoline-tax receipts. The Highway Trust Fund already requires transfers from the Treasury's General Fund because spending exceeds fuel-tax revenue.

Direct effects:

Drivers would save more over time.

The Highway Trust Fund deficit would widen.

Congress would likely face pressure either to:

transfer more money from general revenues,

reduce future transportation spending,

borrow more,

or restore the tax.

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