Friday, 28 April 2006
These days it seems like gas taxes are going up by the hour. For example, yesterday morning gas was $2.99 at the gas station near my house. When I got home from work, the price was now $3.05.
With all the pain at the pump, "gasoline tax holidays" are becoming a popular idea at the statehouses. It seems so simple, lift the tax and prices go down and consumers are happy. In reality, it doesn't work that way. For example, in 2004 Indiana lifted its gasoline tax during the summer to try and give consumers a break. The result? Gas prices barely budged at the retail level.
Many people don't understand where in gas tax goes. In many states, it is the SOLE funding for transportation projects in the state. It acts as a user fee for those using the transportation infrastructure in the state. When the gas tax is lifted where is the funding for new projects and maintenance coming from? Good question! Chances are lawmakers will fill the hole with general fund money or NOT AT ALL.
In Texas, House Democrats are calling for a summer suspension of the gas tax. This will leave an estimated $700 million hole in the transportation budget. In Maryland, Republican Governor Bob Ehrlich is considering lifting a portion of the gas tax for the summer. In New York, Assembly Republicans are endorsing a cap on the sales tax on gasoline. Their plan would save consumers 8 or 9 cents a gallon. 8 or 9 cents? Is it really worth it to harm transportation funding to save 8 or 9 cents?