Yellen Says Gasoline Tax Holiday Worth Considering as Anti-inflation Tool

High fuel prices have been “a substantial burden on American households,” U.S. Treasury Secretary Janet Yellen said. A fuel tax holiday that temporarily eliminates such taxes, “while not perfect, it is something that should be under consideration.”

David Lawder, Reuters

U.S. Treasury Secretary Janet Yellen said on June 20 that a gasoline tax holiday should be considered as a way to address inflation, even if it is “not perfect” and may not result in all of the reduction passed on to consumers.

Yellen, speaking to reporters after meetings with Canadian Finance Minister Chrystia Freeland in Toronto, said that research suggested that there was likely a higher pass-through rate for cutting higher state fuel taxes than the generally lower federal taxes of 18.4 cents a gallon for gasoline and 24.4 cents for diesel. The levels are unchanged since 1993.

“I think the research suggests that there’s reasonably high pass-through when the state does it to prices at the pump, not full, but reasonably high,” Yellen said. “At the federal level, we have lower much lower gas taxes than at the state level, and the evidence is more mixed.”

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