Stimulus Update: Gas Tax Holiday Might Spell Modest Relief, but It's No Stimulus Check
- President Biden has proposed a three-month gas tax holiday that saves consumers money at the pump.
- The impact of that savings could unfortunately be minimal for most people.
A new proposal should lower gas costs, but it won't be enough to help consumers cope with inflation.
Ever since the start of the Ukraine conflict, gas prices have been soaring. And while some Americans are cutting back on driving in an effort to minimize their costs, for others, that's not an option.
But gas isn't the only expense that's soaring. Thanks to inflation, Americans are paying more for everything from groceries to household essentials to apparel. Throw in skyrocketing rents, and many people are now deep in the throes of a personal financial crisis.
Meanwhile, President Biden is proposing a three-month gas tax holiday that could offer up some relief at the pump. But unfortunately, it won't come close to providing the amount of aid that a stimulus check might.
Modest aid at a time when Americans need more
Federal gas taxes are baked into the price consumers pay at the pump. Biden is proposing a three-month break from those taxes to give consumers relief this summer. But while that proposal is helpful, its impact may be limited.
Right now, the federal gas tax rate is $0.184 per gallon. For someone who uses 20 gallons of gas per week, that's a savings of $3.68. For someone who uses 40 gallons per week, it's $7.36.
Over the course of 12 weeks, which is what the gas tax holiday is supposed to span, that could mean savings of roughly $44 to $88. At a time when so many people are rapidly depleting their savings to stay afloat, it's easy to argue that every little bit helps. But at the end of the day, that level of savings doesn't come close to mimicking the impact of a stimulus check.
The last stimulus check to hit Americans' bank accounts was worth up to $1,400. Now back then, unemployment rates were soaring, which isn't the case today, so it's harder to make the case for another stimulus round. But still, there's a world of a difference between a $1,400 payday and a modest amount of savings linked solely to gas fill-ups. And so while it's a good thing that lawmakers are trying to offer consumers relief at the pump, ultimately, a three-month gas tax holiday may not go very far.
Let's also remember that city dwellers don't always have cars. And people who don't drive stand to gain nothing from this latest proposal.
Ways to cope with inflation
Since consumers can't expect a stimulus check to arrive anytime soon, they may have to carve out their own measures for coping. One option is to take advantage of the booming labor market. Not only are jobs plentiful, but some industries are desperate to hire. So it may be possible for some workers to boost their wages by applying for new job opportunities or taking on side hustles.
But beyond that, the age-old advice of "cut back on spending" may not apply to today's economic situation. A lot of people are barely scraping by after having cut all non-essential expenses. And while we shouldn't expect a stimulus check to come to their rescue, those who are really struggling should look into different government programs, like food benefits, and see what aid they qualify for.
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