May 12, 2026
Open Letter to Congress: Suspension of Federal Gas Tax Is Not the Answer
As you consider policy responses to rising energy costs, National Taxpayers Union (NTU) cautions against a temporary suspension of the federal gasoline and diesel tax. While such proposals may appear politically appealing in the short term, they would do little to provide meaningful relief to consumers while creating significant long-term fiscal and infrastructure challenges. Congress should instead pursue policies that address the root causes of high energy prices and strengthen America’s long-term energy security.
Most importantly to consumers, suspending the federal gas tax would likely have little to no measurable impact on prices at the pump. In fact, numerous analyses of past gas tax holidays have shown that savings are often absorbed elsewhere in the supply chain rather than passed on fully to consumers. Even when prices did decline somewhat, the effect was usually modest and short-lived compared to broader market forces affecting energy prices.
To be clear, while NTU supports reforming our system of state and federal transportation taxes, taxes are not the primary driver of the current surge in gas prices. The only serious solution is the restoration of global energy flow from the Middle East, which has been substantially disrupted due to the conflict in Iran.
Suspending the federal gas tax would further weaken the Highway Trust Fund, which is already on an unsustainable fiscal path. Revenues from the gas tax are the primary funding source for federal highway and transit programs, so essentially dropping those revenues to zero, even temporarily, would deepen existing funding shortfalls and increase pressure for more general fund transfers to what is supposed to be a self-sustaining fund. A three-month gas tax suspension would likely cost the Fund upwards of $12 billion in lost revenue when the Fund is already expected to be insolvent next year. At a time when America faces substantial infrastructure maintenance needs, Congress should avoid policies that undermine the user-pay principle and jeopardize long-term transportation investment.
Finally, there must be an acknowledgement that no policy will be a panacea that will immediately lower energy prices. However, there are some steps Congress can take to keep energy affordable to bring price stability over the long term. They should include comprehensive statutory permitting reform, expanding access to drilling on federal lands and waters, transitioning toward a better financing mechanism of the Fund, elimination of the Jones Act, and encouraging states to reduce regulations on refiners, particularly in California.
Congress should also pursue broader fiscal and monetary stability policies that help reduce inflationary pressures across the economy. These types of reforms would provide consumers with more durable relief while strengthening America’s energy resilience and economic competitiveness.
Thank you for your consideration of our views on this matter.
Sincerely,
Thomas Aiello
Vice President of Federal Affairs