Biden to propose 3-month federal gas tax holiday: What it means for Michigan

President Joe Biden is expected to propose a holiday on the federal gas tax Wednesday, as drivers pay record-high prices for gas throughout the U.S.

Such a federal gas tax holiday would have to be approved by Congress, where similar proposals have been floated this year. Biden envisions the holiday lasting through September.

Biden is expected to announce the proposal at a press conference 2 p.m. Wednesday. Here's a primer on why the White House is calling for relief at the pump and what it would mean for drivers in Michigan:

Why is Biden calling for a federal gas tax holiday?

The national average cost for a gallon of fuel surpassed $5 for the first time June 11, per AAA. With consumers feeling squeezed at the pump, the White House is hopeful Congress can approve a measure to provide some relief.

More: With gas prices at $5 a gallon, Biden tells oil companies to cut costs for Americans

How much is the federal gas tax?

Drivers pay 18.4 cents per gallon in federal taxes for gasoline and 24.4 cents per gallon for diesel fuel.

Revenue from the federal gas tax funds the Highway Trust Fund, which is used to pay for transportation and mass transit projects. Biden wants Congress to offset the loss of highway funds – estimated to be about $10 billion – with other federal tax revenue. With the federal government's deficit down $1.6 trillion this year, the U.S. can afford to pause the gas tax, an administration official said to USA Today.

In February, a group of senators proposed suspending the federal gas tax through December, although that bill has not advanced out of committee, according to the congressional website.

How high are gas prices in Michigan right now?

The average price for a gallon of regular unleaded was $5.13 on Wednesday, according to AAA. That’s higher than the national average of $4.95, but it is lower than it was a week ago, when the average cost for a gallon of gas in Michigan was $5.21.

While regular gas prices in Michigan have been decreasing slightly in recent days — diesel prices are not decreasing — the average price for a gallon of diesel was $5.96 on Wednesday, compared to $5.84 on June 15.

Gov. Gretchen Whitmer has called for a federal gas tax holiday, first in March and then again Tuesday, when she sent a letter to the White House urging Biden to work with Congress to temporarily pause the federal gas tax.

“Getting this done would save Michiganders money right now,” Whitmer said in a video posted to her Twitter. “I hope Congress and the president can work together to offer American families real relief at the pump.”

More: Whitmer, Buttigieg open to state and federal gas tax relief

What other proposals are there to lower fuel costs for Michiganders?

In Michigan, officials have proposed a series of ideas to offer some relief to drivers, but so far, none of them have been signed into law.

Republicans in the Michigan Legislature passed a bill to suspend the 27-cent per gallon state tax on fuel, but Whitmer vetoed it when it came to her desk in April, arguing the revenue lost from the state’s gas tax would hamper construction work on Michigan’s roads and bridges.

There has been recent movement on temporarily suspending Michigan’s 6% sales tax on fuel — in May, the Michigan Senate passed bills to pause collections on the 6% sales and use taxes on gas purchases and the 27-cent-per-gallon excise gas tax.

As written, the bill package called for pausing collections from June 15 to Sept. 15. The Michigan House of Representatives hasn’t taken up the bill yet, but Whitmer’s office has signaled support for the legislation — in March, Whitmer called for a temporary suspension of the fuel sales tax.

She signaled support for bipartisan negotiations over immediate relief for fuel costs earlier in June, speaking to the Free Press alongside U.S. Secretary of Transportation Pete Buttigieg at the Mackinac Policy Conference.

"... I'll continue to negotiate with the Legislature to see ... that it is fiscally sound and that it is real and it can move quick enough to actually give people relief," Whitmer said earlier this month. "I'm not interested in a talking point or something that goes into effect next year."

Contributing: USA Today.

Contact Arpan Lobo: alobo@freepress.com. Follow him on Twitter @arpanlobo. Become a subscriber today.

This article originally appeared on Detroit Free Press: What a federal gas tax holiday would mean for Michigan