(CNN Spanish) — The price of gasoline is giving Americans no respite and, as a way to ease the pressure, President Joe Biden wants to ask Congress to suspend the federal tax until September and for states to do the same with their own rates. How much would you pay per gallon with these changes? On a national average, the savings could be about 57 cents per gallon, but the figure changes significantly depending on the state.
The first obligatory reference: as of this Wednesday, June 22, the national average for a gallon of gasoline is US$4.96, according to figures from the American Automobile Association. Recently the national average of the gallon broke the record of US$ 5 and there are forecasts that speak of an average of US$ 6 by the end of the summer.
What taxes do you pay when filling gasoline?
The federal taxes — the ones the president is proposing to suspend — include excise taxes of 18.3 cents per gallon for gasoline and 24.3 cents per gallon for diesel, and a Leaking Underground Storage Tank fee of 0.1 cent per gallon in both cases. In the case of gasoline, then, the figure charged by the federal government adds up to 18.4 cents per gallon, according to data from the Energy Information Administration.
But this figure falls short, very short in some states, to have an overview of the weight of taxes in the gallon. States charge their own fees which may include excise, environmental, excise, and inspection fees, among others.
Taking both tax sources into account, the national average is $57.09 per gallon for gasoline and $66.64 for diesel, according to the American Petroleum Association.
The differences are significant between states: California, which has the most expensive gallon of gasoline (at an average of $6.37 on Wednesday), also has the most expensive taxes. Adding the federal plus the state ones, they reach 86.55 cents on the dollar. The state with the lowest taxes is Alaska, where they add 33.53 cents per gallon, although it remains one of the most expensive in absolute terms (it was trading, on average, at US $ 5.61 this Wednesday).
What Biden wants
In a speech Wednesday, Biden will ask Congress to suspend federal taxes on gasoline and diesel through the end of September, CNN’s Kevin Liptak reported based on remarks from high-ranking administration officials. He will also ask states to take steps to eliminate their own taxes and refiners to increase capacity.
“The suspension of the federal tax on gasoline will not solve the problem by itself, but it will give families a little respite while we continue to work to reduce prices in the long term,” an official told reporters.
A “little respite” of how much exactly?
In the table that we show you below, you can see how much the gallon of fuel would be if only the federal tax or the federal and state taxes were removed. The national average and that of the 5 states where it is paid more expensive is taken as a reference, according to the figures that the AAA updates daily. To make the calculation, meanwhile, the reference of the current taxes is that of the American Petroleum Association.
Doubts about the measure
Some Democrats have even questioned the possibility of suspending the federal tax, arguing that it is important to finance highways. The president would ask to be able to use other sources of income to offset that loss, according to officials.
Economists also argue that the savings for consumers would be minimal, because retailers could raise the base price to compensate for the change. Biden is “asking businesses to make sure those savings are passed on to consumers,” the official said, though he also acknowledged that this move alone “is not going to solve the whole problem.”
From the administration they have said that the measures they propose could cause the price to drop by around one dollar per gallon, but that depends on actions that the president does not control. Biden will not speak of “a precise figure,” officials said, but rather he would seek to cite examples of the effect his proposals can have.
With information from Kevin Liptak.