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Whitmer joins other governors calling for suspending federal gas tax amid high oil prices

By Jack Nissen
Published  March 9, 2022 8:18am EST
Consumer
FOX 2 Detroit

Understanding the gas tax and how dropping the federal tax could help ease the pain

The price of gas is higher than we've ever experienced but how do our taxes factor into it? We broke down the math to better understand it - and learn how dropping the federal tax could really make a difference.

Michigan Gov. Gretchen Whitmer joined other governors this week in calling on Congress to suspend the federal gas tax in response to rising prices. 

Whitmer joined governors from Wisconsin, Minnesota, Colorado, New Mexico, and Pennsylvania in a letter urging leaders in Congress to pass the Gas Prices Relief Act to suspend the gas tax. The legislation already has the backing of three representatives in Michigan's congressional delegation.

Gas prices hit a record-high Tuesday as the cost for a gallon of petroleum reached an average of $4.17 in the U.S. Prices in Michigan fell just below $4, however that's likely to continue growing.

In order to offset the loss of revenue, the bill would authorize the U.S. Department of Treasury to transfer general fund dollars to replace the temporarily lost revenue of a halted federal gasoline excise tax.

MORE: Why it can cost more to pay with card when buying gas

In Michigan, about 16% of the price of gas is attributed to taxes. Filling up a 15-gallon tank of gas right now would cost motorists $3.94 in the state motor fuel tax, $3.31 in the state sales tax, and $2.76 in the federal motor fuel tax. That's according the Michigan Petroleum Association

In other words, for a single gallon of gas in Michigan, priced at $4.03 as of Tuesday afternoon, the federal gas tax would be 18 cents.

Read more on our breakdown of Michigan gas taxes here. 

The letter from Whitmer and other governors urged Congressional leaders Nancy Pelosi, Chuck Schumer, Mitch McConnell, and Kevin McCarthy to take up both the House and Senate bills swiftly.

"First, it saves Americans at the pump by suspending the federal gas tax for the rest of the year. Money saved at the pump translates into dollars back in consumers’ pockets for groceries, childcare, rent, and more," read part of the letter.

MORE: Michigan drivers will start receiving $400 auto insurance refund checks this week

Pressure at the pump is likely going to get even worse following President Joe Biden's announcement to ban oil imports from Russia over the country's invasion of Ukraine.