Monday, May 19, 2008

Top 10 Reasons a Gas Tax Holiday is a Bad Idea

1. It’s Just a Gimmick
When it comes to campaigning, it is all about choosing the right words to use in your marketing. Anyone who remembers the phrases “weapons of mass destruction,” or “axis of evil” will know what I mean (how many times did we hear those phrases in the lead up to Operation: Iraqi Freedom?). In this election cycle, Senator Obama has made a strong effort to push the word “change,” which explains why the word is visible in almost every picture you see of Obama. Nonetheless the phrase “gas tax holiday” is merely another political slogan designed to encourage Americans to vote for a candidate.

2. Loss of Federal Revenue
If the federal government stopped collecting a tax on fuel, then it will be a direct loss of revenue for the government, plain and simple. With our economy continuing in a downward spiral, record breaking military expenses in the middle east, an ever increasing national debt, I doubt the government can afford to lose this source of revenue, let alone any.

3. Direct Impact on Working Families
If the government does not have revenue from gas taxes, then it is going to have a direct effect on people working in the construction industry. The tax levied on gasoline and diesel is what pays for highway and road construction. Without this money, the government would not be able to pay those working in this industry. Some estimates put the number of lost jobs at over 300,000, which does seem slightly inflated to me. However, any reduction of the tax collected from gasoline will definitely result in lost jobs.

4. Poor Quality Roads
The lack of federal transportation revenue will impact more then just those working in construction. The condition of our roads and highways is deteriorating, and without revenue to fix them the condition will only get worse. So a gas tax holiday may save you some money this summer, but you will probably regret the money this fall when you are stuck in hours of traffic on your way to work.

5. State Gas Taxes
The gas tax holiday only applies to the federal excise tax of 18.4 cents on gasoline and 24.4 on for diesel. However, these are not the only taxes that consumers pay on fuel. Nearly every state has their own tax, and some are upwards of 40 cents per gallon. The gas tax holiday would do nothing about these state fuel taxes.

6. Bad Message
Earlier in the week, polar bears were officially added to the added to the endangered species list. What does that have to do with a gas tax holiday? Well, exhaust fumes are bad for the environment and could lead to pollution and harm to the environment. Also, with the added threat of global warming looming, shouldn’t the government be discouraging motorists from using excess gasoline? In Europe, the taxes on fuel are higher then in the United States and consequently there is less gas consumption. If anything, our government should be encouraging people to reduce their gas consumption. How about increasing hybrid credits?

7. Increased Demand = Higher Prices
Many economists are claiming that lower prices will correlate directly to an increase in demand, which on the open market will likely increase the cost of fuel. Some argue that since gasoline is traded on the world market that we will not see a price increase. However, it is obvious that if gas was cheaper people would use more of it.

8. Continued Record Oil Profits
With the increased demand that would result from a gas tax holiday, some estimate that it would give even more revenue to the big oil corporations. These corporations already post record breaking profits every quarter for the last five years. Instead of lowering fuel taxes on consumers, why not increase taxes on the oil corporations?

9. Does Not Solve Anything
A gas tax holiday ignores the bigger problem; this country is dependent on foreign oil. It will do nothing to solve this problem. Gas prices are increasing at alarming rates and a small tax break is not going to stop prices from increasing in the long run.

10. Bottom Line: 30 Bucks
Let’s face it, all you really get under a gas tax holiday is about $30. Some estimates from Senator Clinton’s and Senator McCain’s camp say that this number is slightly higher, maybe $50. But what kind of effect is a $50 tax credit really going to have on the nation’s economy?

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