Tax cut could push gas prices higher

[Lone_Star_Dem]

Despite claims from McCain and Clinton, temporary cut in gas taxes could lead to more demand and push prices higher - leaving taxpayers to cover shortfall.

NEW YORK (CNNMoney.com) -- Two presidential contenders are calling for a temporary suspension of the federal gas tax, a move that experts say will do little to help motorists and could actually push prices higher.

Democrat Hillary Clinton has joined Republican John McCain's call for a hiatus in the 18.4 cent-a-gallon federal gas tax between Memorial Day and Labor Day - a period when vacationing Americans spend the most time on the road.

"Record oil prices are contributing to higher energy prices, food prices and a squeeze that is making many middle-class families feel like they are falling further behind," Clinton said in a statement on her Web site. "Suspending the gas tax will provide real, immediate assistance to American families and for our economy."

McCain, his party's presumed nominee, called for suspending the gas tax earlier this month.

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Pay now, or pay later

For sure, drivers would save a few dollars when they fill up. Assuming the average gas tank holds 13 gallons, removing the gas tax would save drivers about $2.35 every time they filled their tank.

But, of course, overall tax revenue would decline. The federal government collects about $38 billion a year in gas and diesel taxes, with state and local governments bringing in about $78 billion more, according to the Federal Highway Administration.

Most of the money is used to fund highway projects. Suspending the gas tax during the summer would leave a funding gap of about $10 billion.

Analysts - and Democratic presidential frontrunner Barack Obama - said the proposal would do little to stimulate the economy or lower gas prices and could leave roads in disrepair.

More at link: http://money.cnn.com/2008/04/29/news/economy/gastax_cut/index.htm?postversion=2008042911

[leftofcool]

1. The average 13 gal car driver won't save much

but I was wondering about truckers. It would help them.

[Lone_Star_Dem]

4. Yes, in the short term.

However, as an industry I would think trucking would suffer the most from roadways being in a state of disrepair. Then when taxes are needing to be raised to catch up with the damage done they'll suffer even more. In the end it could cost them more as they'd need more repair on their trucks due to poor road conditions.

Overall from reading the article it would appear it's a smoke and mirrors routine.

[shain from kane]

2. Assume that I am an oil company executive. So, the politicians reduce gas taxes. I know that

the consumer had all ready been willing to purchase gas at the previous price level. So, with impunity, I can raise the price of gas to that previous level. I may not do it overnight, but I will eventually raise the price of gas to that level. When the politicians restore the gas tax, then they will get the blame for raising prices yet again. Any politician's actions with regard to the gas tax will benefit the oil executives.

[endarkenment]

3. The money goes right to the oil companies.

It is a Really Stupid Idea. Clinton once again demonstrates her willingness to pander for any opportunity and to engage in right wing idiocy (tax cut panacea) without the slightest hesitation.