Logistics industry skeptical of proposed gas tax holiday

Logistics industry trade groups and others are lukewarm on the Biden Administration’s request that Congress suspend the federal gas tax for three months to ease pain at the pump, with some calling it a “gimmick” that would do little to help consumers and would harm recent efforts to improve the nation’s infrastructure.

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President Biden asked Congress to suspend the tax–which is 18.4 cents per gallon for gasoline and 24.4 cents a gallon for diesel–last week, but the request was met with skepticism from many, including industry trade groups such as the the American Trucking Associations (ATA) and the International Foodservice Distributors Association (IFDA).

Shippers, carriers, and logistics services providers gathered for this week’s SMC3 Connections conference in San Diego said they are skeptical as well. Paul Bingham, director of transportation consulting for S&P Global Market Intelligence, said the proposal would do little to curb the effects of inflation, for instance, saying the move would be “more for show” than anything else. Bingham delivered a U.S. financial update on the first day of the conference. Other speakers at the event agreed, calling it a “band-aid approach” that would bring little savings to U.S. consumers in exchange for a big hit to the recently passed infrastructure spending bill, which receives much of its funding from the gas tax. The proposal could cost about $10 billion, according to White House estimates.

This week’s comments echoed those of ATA President and CEO Chris Spear, who spoke out on the issue following Biden’s proposal last week, calling it a gimmick and asking the administration to “get serious about lowering energy prices and reducing inflation.”

“After months of touting the passage of the well-funded Infrastructure Investment and Jobs Act–a much-needed investment in our nation’s roads and bridges–the Biden Administration wants to cut that same highway system’s primary source of funding with a suspension of the federal fuel tax,” Spear said in the press statement, adding that Congress and the Biden Administration should consider three alternatives that “will actually make a difference.” Those alternatives are: making America energy independent, renewing trade agreements with the European Union and Asian Pacific nations to export more American oil and natural gas, and balancing the budget, according to ATA.

“… stop wasting hard-earned taxpayer dollars on senseless programs that drive up inflation and runaway deficits,” Spear said. “Energy independence, trade and a balanced budget. Do that, and America wins.”

Officials at IFDA agreed, emphasizing the need to increase energy production in the United States.

“Instead of a gas tax holiday, which will take away from badly needed infrastructure dollars, President Biden should focus on making America energy independent,” IFDA President and CEO Mark S. Allen said in a statement to DC Velocity. “Increasing energy production here at home will have a meaningful impact on energy and gasoline prices and provide lasting relief for all Americans.”

The move would have little effect on shippers, according to Matt Muenster, chief economist at transportation management solutions firm Breakthrough, adding that the larger problem of inflation will continue to dampen consumer spending and overall economic growth.

“Consumer expectations for inflation are an important driver of consumer spending, and a three-month tax holiday will not likely improve those expectations,” he said. “... we can still expect consumer demand for goods to gradually slow with slower economic growth. That leaves the transportation energy and freight markets mostly unchanged for shippers and their respective transportation costs and demand.”