Gas Tax Holiday is a Sham Solution

Senators John McCain and Hillary Clinton have both proposed a “gas tax holiday” for the summer to take the sting out of higher gasoline prices. This is a typical Washington, DC, ploy to make it look like the government is doing something to help, when it really isn’t. However, it’s a lot easier to make this kind of suggestion than it is to hold a senate hearing into refinery downtime and charges of price gouging.

Prices are set by supply and demand, and demand has soared in the last couple of years while supply has not expanded at the same rate. There is a speculative premium in petroleum prices now, and there is no doubt that gasoline prices are much higher than they should be. They are certainly higher than a great many Americans can afford. Filling up the car at $100 a pop hurts people who have to drive. As noted in last Friday’s guest column by Lydia Jacobs, this is especially hard on folks in rural America where the subways and buses are non-existent.

However, the federal gasoline tax these two want to suspend is a whopping 18 cents a gallon. That means that the man or woman who buys 20 gallons a week will save $3.60. Over the course of the 100 days Mr. McCain proposes to halt the collection of this tax, that would come to roughly $50 -- enough for half a tank of gas.

Additionally, that presumes that all 18 cents is passed on to the consumer. Given the way oil companies are posting huge profits, maybe they could be persuaded to do so. Who would like to bet that they will, though? And why wouldn’t a cash strapped local government try to slap a tax on gas to siphon some off for itself?

The 18 cents collected goes to the Highway Trust Fund to pay for road building and maintenance. With the federal deficit exploding, the country doesn’t need to create a funding gap on a road system that is under-maintained as it is. If anything, the tax should be increased to fix the roads and to encourage less driving. That isn’t what most people want to hear, and it will hurt a lot of rural America. The problem is a long-term issue, and it will not respond to a short-term “fix.”

© Copyright 2008 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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