Haley to Call for End to the Federal Gas Tax

WASHINGTON — Presidential hopeful and former South Carolina Gov. Nikki Haley will try to jump-start her campaign for the Republican nomination on Friday with an economic speech in which she will call for an end to the federal gas tax.

Speaking on Newsmax’s “America Right Now” program, Haley previewed the “Remarks on Economic Freedom” speech she is set to give at St. Anselm College in Manchester, New Hampshire, on Friday morning.

Her call to end the federal gas tax is expected to be a cornerstone of her “plan to combat the economic mess caused by Bidenomics.” 

“One of the items in that plan is the fact that we are going to make sure that we eliminate all of the federal gas tax in this country,” Haley said. “We’re going to put that money back into the pockets of the taxpayers. We’re going to try and reduce inflation by making sure we’re not energy independent, but we’re energy dominant.

“We’re going to stop the spending, and we’re going to come out with another list of plans on how we’re going to move all of the functions from the federal government down to the states so that we can reduce the size of the federal government and empower the people in the states,” she continued. “We’re going to get our budget back on track — that’s why we need an accountant in the White House.”

In her brief remarks on Newsmax, Haley did not hint at how she would offset the loss of federal gas tax revenue, nor did she say how she would get states to go along and forgo their state gas tax revenue.

According to the U.S. Energy Information Administration, as of July 1, 2023, the federal gas tax on gasoline was 18.40 cents per gallon retail; the tax on diesel fuel was 24.40 cents per gallon.

Meanwhile the average of total state gas-related taxes was 32.26 cents per gallon retail; while the average total state tax on diesel was 34.20 cents per gallon.

Federal taxes include excise taxes of 18.3 cents per gallon on gasoline and 24.3 cents per gallon on diesel fuel, and a Leaking Underground Storage Tank fee of 0.1 cents per gallon on both fuels. 

State taxes include rates of general application including, but not limited to, excise taxes, environmental taxes, special taxes and inspection fees, but they exclude state taxes based on gross or net receipts. State taxes do not include county and local taxes.

This isn’t the first time Haley has spoken out against the gas tax. During her later years as governor of South Carolina, she repeatedly clashed with the state Legislature over its plans to scrap the tax on gasoline.

In the mid-2010s, Haley, who served as the state’s 116th governor from 2011 to 2017, staked out a position of being against tax increases in general, and against a gas tax increase specifically.

Eventually, she settled on a position of agreeing to a modest gas tax increase, but only if it was accompanied by a dramatic cut to the state’s income and new rules for selecting the state Transportation Department commissioners who oversaw road construction projects.

Soon, other powerful South Carolinians, including former U.S. Sen. Jim DeMint, R-S.C., were lining up behind her. DeMint called her gas tax and tax reform plan “a great step forward” that could make the state more competitive.

DeMint, then-president of conservative think tank The Heritage Foundation, told the foundation’s internal newspaper The Daily Signal that Haley’s tax plan “continues to show why she’s a national leader.” 

In her State of the State address, Haley called for a 10-cent gas tax hike to accompany a proposed slash of the state’s income tax rate from 7% to 5%.

In the end, she was forced to compromise with the Legislature on the issues, allowing the gas tax increase — while keeping South Carolina’s state gas tax among the lowest in the country — but getting a commensurate income tax decrease and other things she wanted.

Haley resigned as governor a few months later to become the Trump administration’s ambassador to the United Nations; she was confirmed by a bipartisan majority of 96-4.

Dan can be reached at [email protected] and @DanMcCue