4-15-08 by dugan
The big upside of Sen. John McCain’s proposal
today to suspend the 18.4-cent federal gasoline tax through this summer
is that it’s simple and popular: Get rid of a tax and reduce the price
of gasoline immediately. Those aren’t little points, with the prices of
oil, gasoline, diesel, natural gas and home heating oil hitting new records too fast to keep track of and stoking painful inflation. But it’s the second level of the idea where trouble starts.
- The gasoline tax and the 24.4-cent per gallon diesel tax are the
primary source of federal funds to maintain federal highways, bridges
and tunnels, which are in bad shape and getting worse. Given the
leaping federal deficit, the money isn’t going to come from "somewhere
- Suspending the tax won’t stop the rise in the underlying price,
and will make it politically easier for oil companies and independent
refiners to keep boosting their profits on producing gasoline.
Currently, those profits are at least dampened by consumer outrage at
- The suspension won’t address the market speculation that has
boosted oil far beyond supply and demand needs. It won’t push Congress
to eliminate some of the completely unneccessary tax subsidies that
only add to oil companies’ outrageous profits. It’s a quick fix with no
long-term plan behind it.
- At the end of summer, when the tax is to be restored, Congress
will be under intense pressure not to do it, especially if prices keep
rising. Imagine what the reaction would be if Congress added 20 cents a
gallon to today’s prices, right now. But without the tax, U.S. road
infrastructure turns into one big pothole, and dangerous old bridges
may rot until they fall.
Sen. McCain knows a good populist idea when he sees one. Its true
cost just won’t become visible until it’s too late to hold anyone
In California, on the other hand, drivers are really
being stiffed by the state’s percentage sales tax on gasoline
(currently 7.5%), because it rises in tandem with pump prices. This has
the effect of suppressing any action to control gasoline prices,
because the state wins when drivers suffer. Legislators should convert
the tax to a flat amount–but one reason they don’t is the impossible
two-thirds vote needed to increase any tax. It’s a failure of both
state law and political will.