S-4032-119
Read twice and referred to the Committee on Finance.
Sponsored by Mark Kelly (D-AZ)
What it does
The bill would set the federal gasoline excise tax rate to zero, and would turn off the Leaking Underground Storage Tank financing rate, for gasoline removed, entered, or sold from enactment until October 1, 2026. It would require the Treasury Secretary to move money from the general fund into the Highway Trust Fund and the Leaking Underground Storage Tank Trust Fund to cover the lost tax revenue. It also states a congressional policy that fuel producers and dealers pass the savings on to consumers, with penalties of at least the unpassed amount, and directs the Treasury Secretary to use all applicable authorities to ensure consumers receive the benefit.
Who benefits
Drivers and households that buy gasoline during the holiday, who may see lower pump prices if the savings are passed on. Businesses with large fuel costs, such as trucking, delivery, and ride-hire operators (diesel is not covered, so truckers benefit only for gasoline). The Highway Trust Fund and underground tank cleanup fund, which would be reimbursed from general revenue so their balances would not fall.
Who is hurt
Federal taxpayers broadly, since the general fund would cover the lost gasoline tax revenue, which could add to the deficit. Fuel producers and dealers that could face monetary penalties if they are found not to have passed along the cut, and that must handle the compliance burden. Users of diesel and other fuels who get no cut. Long-term road funding, if the holiday sets expectations for repeated suspensions of a user-fee tax.
Supporters argue
Supporters argue that a temporary suspension of the 18.4-cent federal gasoline tax gives immediate, broad relief to households facing high fuel prices. They contend that backfilling both trust funds from the general fund protects highway and cleanup funding, and that the penalty and enforcement language is meant to keep the savings from being absorbed by sellers rather than reaching drivers.
Opponents argue
Opponents argue that past gas tax holiday proposals have produced uncertain pass-through to consumers, since pump prices depend on many market factors beyond the tax. They contend that replacing the revenue from the general fund adds to federal borrowing, and that the penalty provision creates unclear enforcement duties and liability for sellers who cannot control retail prices.
Constitutional context
Congress has power to lay and repeal excise taxes under Article I, Section 8, Clause 1, and the uniformity requirement is met by a nationwide rate. As a revenue measure it must originate in the House under the Origination Clause, and this is a Senate bill, which raises a possible procedural issue. The penalty and enforcement language may raise Due Process questions if applied to sellers, though the bill sets no specific penalty procedure.
Checks and balances
The executive branch (Treasury) gains enforcement and transfer duties, with broad discretion to use all applicable authorities; Congress retains control through the fixed end date and appropriations, and courts could review any penalties imposed.
Historical precedent
Federal gas tax holidays have been proposed repeatedly, including in 2008 and 2022, but Congress has not enacted a suspension of the federal gasoline tax.