Business & Economy

As Biden pitches gas tax holiday, Scott considers following suit in Vermont

Traffic travels along Pine Street in Burlington. After President Joe Biden proposed suspending the federal gas tax, the governor is exploring the process of following suit in Vermont. File photo by Glenn Russell/VTDigger

Amid rising gas prices nationwide, President Joe Biden on Wednesday pressed Congress to implement a three-month federal gas tax holiday — and urged states to suspend their respective fuel taxes as well. 

Gov. Phil Scott believes a gas tax holiday on the state level is “definitely worthy of consideration,” Scott’s press secretary, Jason Maulucci, said. 

“(Scott) is always supportive of finding ways to provide tax relief for Vermonters and Americans, especially given the tremendous squeeze the families are feeling as a result of 40 year high inflation and record prices at the pump,” Maulucci said. 

Fuel prices have been on the rise since last year and jumped sharply following Russia’s invasion of Ukraine in February. Last week, gas prices in Vermont reached a record average high of $5.055 per gallon. One year ago, prices averaged $2.978 per gallon. 

In Vermont, gas is currently taxed at around 30 cents per gallon, and diesel fuel is taxed at 32 cents per gallon. Those taxes support the state Agency of Transportation, accounting for 28% of Vermont’s transportation revenue. The state uses that money to fund construction and maintenance on roads, bridges and other infrastructure around Vermont. 

“We'd want to see how some of that money would be backfilled to make sure that those critical projects are funded,” Maulucci said. 

This is not the first time Vermont has discussed decreases in state gas taxes. Recommendations last December by the Vermont Climate Council called for 40% of new vehicle sales to be electric by 2025. As a result, fuel tax revenue would decrease as consumers shift from gas to electric — an issue that lawmakers could still have to reckon with in the future. 

New York implemented a gas tax holiday in April as part of its state budget, taking effect from June 1 to the end of the calendar year. Three other states — Connecticut, Georgia and Maryland — have suspended their gas taxes for shorter periods of time. 

Scott is waiting to hear more from Washington before coming to a decision, Maulucci said. The governor’s office expects to have more information in the next week. 

Federally, gas is taxed at 18.3 cents per gallon, with diesel fuel at 24.3 cents per gallon. Vermonters in Congress, and those who hope to be elected come November, have varying stances on the efficacy of implementing a gas tax holiday. 

Some politicians worry that lifting the gas tax, while providing immediate relief, could lead to even more inflation down the line as fuel consumption rises.

“Vermonters, and all Americans, are feeling the pain at the pump, and I am committed to considering any proposal that can help relieve that,” Sen. Patrick Leahy, D-Vt., said in a statement to VTDigger. “However, we must be sure that any action Congress takes does not create more strain on middle class pocketbooks in the months and years ahead.”

Sen. Bernie Sanders, I-Vt., has previously voiced opposition to a gas tax holiday, tweeting shortly after prices began to spike in March that the plan was “a bad idea.”

“If we're serious about providing consumers relief at the gas pump, let's take on the greed of big oil by enacting a windfall profits tax and ending OPEC's illegal price-fixing cartel,” Sanders wrote.

Rep. Peter Welch, D-Vt., who is running for Vermont’s open U.S. Senate seat, told VTDigger on Wednesday that it would be important to make sure that the money saved from tax cuts would go toward the consumer as opposed to oil companies or retailers. 

"Anything that is effective that reduces prices for the consumers I support,” he said, “but we've got to make certain in this proposal that it's not going to be yet another windfall for Exxon Mobil and Chevron and big oil. So we've got to see the final language on this bill to make certain that anything that we do can help us to benefit the consumers."

In a speech Wednesday afternoon, Biden said putting consumers first would be a priority. 

“I call on the companies to pass every penny of this 18 cents reduction to the consumers,” Biden said. “There’s no time now for profiteering.”

Democrats in the U.S. House of Representatives are split on their support for the holiday, with some citing the small amount of relief it would provide compared to the drastic spike in prices. 

“The division really reflects the reality that even with the gas tax holiday, gas prices are way too high,” Welch said. “They're really hammering families. It's really going to be brutal when we get into the home heating fuel season.”

Candidates running for Vermont’s open congressional seats said they recognize the necessity to cut down fuel prices nationwide, but have reservations about the federal tax holiday as a solution. 

"Sky high energy prices are crippling Vermont and our nation’s economy, and politicians in Washington are not getting the job done,” Christina Nolan, a former U.S. Attorney and Republican candidate for U.S. Senate, said in a statement to VTDigger. “I appreciate today's effort by the White House, but believe it’s a short term fix to a long term problem. What we need is responsible American energy independence."

“This proposal by President Biden is a step in the right direction to provide urgent and immediate relief to Vermonters over the coming months,” Lt. Gov. Molly Gray, who is running for Vermont’s open U.S. House seat, told VTDigger. “But it is not the answer to climate action that is needed to ensure energy independence and to strengthen our resilience and transition to renewable energy sources.”

Gray’s chief rival in the Democratic U.S. House primary, Vermont Senate President Pro Tempore Becca Balint, D-Windham, said in a statement that she supports the gas tax holiday, “but it isn’t enough.”

“Vermonters need relief from high gas prices, filling up the tank is painful right now,” Balint said. “But I am concerned that savings from a gas tax will not actually get to Vermonters but instead will go into the pockets of big oil companies, further padding their record profits. President Biden knows that more needs to be done, and I would support cracking down on the egregious price gouging that oil and gas corporations are engaging in right now, taxing their huge windfall profits, and giving that money back to Americans for some relief.”

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Jenna Peterson

About Jenna

Jenna Peterson is a student at the University of Southern California, where she is majoring in journalism and political science. She is news editor at the Daily Trojan at USC and was an editor of the Burlington High School student newspaper when it received a special New England Newspaper & Press Association award for successfully fighting a censorship effort by school administrators.

Email: [email protected]

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