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Cities Seek Alternatives to Gas Tax Holidays

Suspending fuel fees during the summer driving season may be politically popular, but policymakers looking to relieve high transportation costs have other options. 

An American flag flies next to an Exxon Mobil Corp. gas station in Cherry Valley, Illinois. 

An American flag flies next to an Exxon Mobil Corp. gas station in Cherry Valley, Illinois. 

Photographer: Daniel Acker/Bloomgerg

Over the Fourth of July weekend, many US residents will celebrate with a classic American tradition: driving around. The American Automobile Association predicts a record 42 million people will travel 50 miles or more by car, even with gas prices nearing $5 gallon on average. 

In response to high fuel costs, the Biden administration urged Congress last week to suspend the federal gas tax for three months and pushed states to suspend their taxes as well. The federal government currently charges an 18-cent tax on every gallon of gasoline; state fees vary widely, but on average they add another 30 cents per gallon. Biden hopes that tax relief will help inflation-stressed households, and maybe earn Democrats a midterm bump. Several states, including Maryland, Georgia, Connecticut and New York, already suspended gas taxes temporarily, and many more have proposed bills to do so; 16 states have proposed rebates, credits or stimulus payments.