McCain Gas Tax Reprieve No Real Break
When he outlined his economic policy a speech yesterday, Republican presidential nominee John McCain came out in favor of a three month suspension of the gas tax from Memorial Day to Labor Day. McCain’s policy will certainly generate some support from businesses being hurt by the high cost of fuel — and the average Joe might rethink cancelling a family road trip — but that does not make it a good idea.
In fact, suspending the gas tax right now makes very little sense. The U.S. already has one of the most insubstantial gas taxes in the world among industrialized countries. If you go over to Europe right now, you’ll be lucky to pay less than $8 American for a gallon of gas. Across Europe, 60% of what drivers pay on gas goes to taxes.
Under the McCain plan, the average American commuter would save — approximately — 18 cents per gallon (or about 5% of each gallon). According to the American Association of State Highway and Transportation Officials, the average American commuter would save $28 over the course of the summer. We did the math ourselves and came up with $27 (3,000 miles driven over three months with an average fuel economy of 20 mpg equals 150 gallons of gas times 18 cents equals $27).
And what do we all get in exchange for our saved $27 or $28? Money from the gas tax goes to the federal Highway Trust Fund, and the American Society of Civil Engineers estimates that every dollar invested in our highways creates $5.40 in economic benefits, not to mention each billion spent creates roughly 35,000 jobs. The trust fund is already $3.4 billion dollars short and cannot afford the cuts. McCain’s suggestion is that we simply tack the whole cut onto the deficit.
The total cost of the McCain plan: Up to $9 billion and 300,000 highway jobs.
According to a report in The New York Times, it makes much more sense to offer low-income Americans rebates for gas, because it will be cheaper and target the people who really need it. Even if gas prices fall 18 cents over the summer, the fuel-related problems facing the U.S. is not about to change, and will likely only get worse each year. For once, American drivers need to start thinking seriously about the future rather than simply kicking the can down the road.
McCain’s Gas Tax Holiday: Smart Politics, Stupid Policy (Autopia)
Editor’s Note: We’re not a political blog, but we will point out when any of the three remaining presidential candidates promise energy policy that directly affects car owners.
