Fuelish holiday

Our view: Proposal to suspend gas tax a cynical play to drivers

April 22, 2008

With gas prices so high, consumers are likely to react favorably to just about any plan that might bring them down. But the latest proposal - to create a summer-long "tax holiday" and offered by Sen. John McCain - is such a spectacularly bad idea that it's hard to believe it's getting serious consideration. Temporarily suspending the federal gas tax could not only harm the nation's transportation infrastructure but also further drive up prices, an outcome that would enrich oil companies without offering a dime's worth of discount to drivers.

The Republican presidential hopeful raised the tax holiday idea last week in an economic policy speech in Pennsylvania. But Democrats have driven down this route, too. Two years ago, Senate Majority Leader Harry Reid and New Jersey Sen. Robert Menendez were pushing for a 60-day gas tax holiday. A few states are pondering local gas tax holidays.

What would happen if the federal government suspended the 18.4 cents-per-gallon tax? At best, it would put very little in the pockets of average citizens. One study estimates about $28 per family.

But that doesn't factor in market forces. When Florida temporarily dropped its fuel tax by 8 cents four years ago, consumers were so eager to take advantage they lined up at the pump. Shortages ensued. Prices did what prices will do in such an environment - they rose.

But wait, it gets worse. Summer is when states need gas tax revenue the most for road and public transportation projects. The federal Highway Trust Fund is financed chiefly by the fuel tax and is already facing serious financial problems. The fund needs more revenue, not less, just to keep up with basic needs.

It's one thing to offer an income tax refund as an economic stimulus; it's quite another to encourage gasoline consumption. As a nation, we need to conserve fuel and foster alternatives such as traveling by train. Had Mr. McCain and others in Washington shown the foresight to keep the gas tax rate on par with inflation, the country would be much further along in weaning itself off foreign oil - and have a far-better transportation system to boot.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.