President Joe Biden called on congress to suspend the federal gas tax Wednesday, but an economist at Indiana University says drivers may hardly notice a difference.
Biden says he wants to suspend the gas of 18 cents per gallon of regular gasoline and 24 cents per gallon of diesel for three months. “It’s really not a great policy,” Kyle Anderson, an associate professor of business economics at the Indiana University Kelley School of Business, told WISH-TV. “It likely won’t lead to much reduction in the price of gasoline.”
With refineries already working at full capacity along with a high demand for gas, prices probably won’t change. Anderson told WISH-TV that suspending a tax won’t increase production or reduce demand which are two contributing factors in lowering gas prices.
However, Anderson says drivers might notice a difference if the state’s gas tax was suspended.
“We might see prices go down by say, 20 or 30 cents per gallon, which is significant, would help somewhat, but the trade off with that is the state would lose a lot of tax revenue that would probably have to make up in some other area,” Anderson said.