The Gas-Tax Holiday

5 May

I propose that the federal government suspend all taxes on gasoline now paid by the American people — from Memorial Day to Labor Day of this year. The effect will be an immediate economic stimulus — taking a few dollars off the price of a tank of gas every time a family, a farmer, or trucker stops to fill up. Over the same period, our government should suspend the purchase of oil for the Strategic Petroleum Reserve, which has also contributed to the rising price of oil. This measure, combined with the summer-long “gas-tax holiday,” will bring a timely reduction in the price of gasoline. And because the cost of gas affects the price of food, packaging, and just about everything else, these immediate steps will help to spread relief across the American economy. -Senator John McCain, April 15, 2008

Seth: As you can see, these are the words of John McCain concerning his proposed “gas-tax holiday,” for which he has gained support from Hillary Clinton. If this was an example of bipartisanship based on sound policy intended to benefit the American people, I’d be happy. Instead we’ve got a feel-good vote-getter that is intended to make these two candidates look good in front of voters.

The federal tax on gas is 18.4 cents per gallon. That means, the tax on filling up a, Camry, the best selling passenger-vehicle in the U.S. in 07 is about $3.33. So if you fill your tank up every other week this summer (7 times) this holiday will have saved you about $23. McCain says with that extra money, “Maybe they’ll [the American consumer] be able to buy an additional textbook for their children when they go back to school this fall.” Great.

Conversely, the tax holiday is said by economists to potentially cost the federal government $10-15 billion in money that would otherwise go to the Highway Trust Fund which helps pay for expenditures for federal highways and mass transit projects across the nation.

This idea is a net loss for Americans. The holiday will benefit us in a small way now, but long term, it is only bad news. The billions lost from the Highway Trust Fund will have to be made up, either with tax increases or reductions in other government expenditures. I’ll guess that Congress goes for the former. Additionally, experts even believe that the relief, which will have its greatest effect on the psyche of Americans will result in increases in demand and consumption, which will only drive prices up further. Lastly, when the holiday is over, prices will go back up, compounded by the effect of greater consumption at a time when Americans should be cutting back. This will happen just at the time when economists predict the economy is going to be the worst for us.

“That’s typical of how Washington works,” [Obama] says of the plan. “There’s a problem. Everybody’s upset about gas prices. Let’s find some short-term quick fix that we can say we did something even though … we’re not really doing anything.

“It’s not a real solution, what it is is a gimmick to get you through the election. That’s what it is, so I said, no, I don’t think that’s a realistic idea,” [Obama] said.”

I give props (much respect) to Barack Obama for opposing this ridiculous idea, even as he faces attacks on every front. This could be a cheap way to score points, but instead he’s holding true to his promise to tell us what we need to hear, not what we want to hear.

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3 Responses to “The Gas-Tax Holiday”

  1. thinkeR May 5, 2008 at 7:16 pm #

    LOL to your clarification on the term “props.” And I agree, it’s very good to see Sen. Obama shedding light on the facts. It’s really sad to see Clinton and McCain manipulate the public at a time when many Americans are so financially desperate. It really makes me sick to listen to Clinton nowadays. She’ll do or say anything for a vote. What ever happened to losing gracefully?

  2. Randy Stimpson July 23, 2008 at 7:23 pm #

    I have heard that the cost of protecting oil resources amounts to around $5 per gallon of gas. Shouldn’t we be paying this tax at the pump instead of with our income tax. If anything we need to tax gas more and tax income less. This would definitely reduce the demand and therefore the pre-tax price of gas. It would also spur innovation.

Trackbacks/Pingbacks

  1. Eliminating the Gas Tax will not lower gas prices | Right Commentary - May 6, 2008

    […] – one more time » Gas Tax Holiday Hoax Hillary Clinton – Watching those Intellectuals The Gas-Tax Holiday « Seth and Ray’s blog pissedonpolitics The Gas Tax Ploy « Civic Alert ShortMinds » Archive » Gas-Tax […]

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