Why Not Lift the Gasoline Tax?

Senator John McCain and Senator Hillary Clinton have both been advocating for a summer suspension of the federal gas tax. Senator Barack Obama says the whole idea is a useless gimmick designed to buy votes. Who is right?

The idea that lifting the taxes on gasoline would reduce its price at the pump has appeal. Everyone would like to pay less. Unfortunately, there is no guarantee the consumer would ever see that savings.

* The gasoline retailers might simply use the savings to increase their profit margins leaving the prices where they are.

* The oil companies might increase their prices to the stations to increase their profit margins.

* If neither of those happened, a temporary drop in retail prices would probably spur increased usage of gasoline pushing up demand. This would result in more rising prices.

So, why even propose suspending the gasoline tax? Because it gives the appearance that the government is doing something about the situation. It gives voters the impression that their politicians care and are trying to help. Unfortunately, the most likely beneficiaries would be the oil companies.

It takes courage to tell voters what they don't want to hear. It takes integrity to admit an idea that sounds great on the surface simply won't work. I commend Senator Obama for doing just that. I also wonder what happened to John McCain's straight talk.

That's Wade's 2 cents.

Wade Houston
May 14, 2008