By Andrew Cline on 4.26.06 @ 12:08AM
Republicans could turn gas prices into a victory, but they won't.
Sen. Robert Menendez, D-N.J., on Tuesday proposed suspending the
federal gas tax for two months. He wants to replace the revenue by
lifting oil industry tax breaks. Gas price hikes are caused by oil
industry greed, he says.
"Last year the big oil companies hiked gas prices and blamed an
act of God, but it's crystal clear that the current spike in gas
prices is at least partly due to an act of greed," he said.
Well, not really. The gas companies have not conspired to
increase demand in China and India and put a lunatic in charge of
Iran. What is crystal clear is that taxes make up a much larger
percentage of the price of gasoline than oil company profits
do.
The federal gas tax was first imposed in 1932. It was only 1
cent per gallon, and it was supposed to be temporary. It wasn't.
From 1959 to 1981 it stayed at 4 cents a gallon. But in 1982 the
federal government got hot for mass transit. Since then the federal
gas tax has risen from 4 cents a gallon to 18.4 cents, or 360
percent, the Tax Foundation has noted.
The American Road and Transportation Builders Association
reports that since 1997 only 84 percent of the gasoline tax has
gone to the Highway Trust Fund. Fifteen 1/2 percent goes to mass
transit, and another half-percent goes to other trust funds.
According to the Energy Information Agency, almost a quarter of
the price of a gallon of gas goes to taxes. Refining costs and oil
company profits combined make up less than 20 percent. (Those
percentages will be slightly smaller now, with prices having risen
so fast in the past month.) But the EIA does not include some local
taxes in that count. The Tax Foundation and the American Petroleum
Institute found last fall that taxes accounted for 45.9 cents of
the cost of each gallon of gas. That's a United States average, the
total differs state to state. It ranged from 26.4 cents in Alaska
to 60 cents in California.
Just three years ago, Congress was considering raising the
federal gasoline tax from 18.4 cents a gallon to 24.4 cents. Two
years ago, Rep. Don Young, R-Alaska, proposed raising the gas tax
by 5.45 cents a gallon to 23.85 cents. He wanted more money for
pork. Now, of course, such a proposal would be political
suicide.
It is telling that Rep. Young, the master of road pork, was
behind the push to hike the gas tax. The tax is a big source of
pork-barrel appropriations. It could be cut if Congress were
willing to part with some transportation-based earmarks.
In fact, President Bush could help his sagging popularity by
proposing to cut the federal gas tax as part of his newfound fiscal
responsibility. Better yet, he could propose a permanent cut
coupled with a short-term, say six-month, suspension.
Imagine the President insisting that Congress cut the federal
gas tax by, say, 5 cents a gallon, or just over 25 percent, and
suspend the full tax for six months. The Republicans could pass it,
effective immediately, and the President could go on television and
tell the American people to check the price at the pump the next
day. If it isn't lower by 18.4 cents, then the station is gouging
them.
Democrats already are making political hay out of high gas
prices. The GOP could erase the issue by suspending and cutting the
federal tax and making similar pushes at the state level. The move
also would help educate Americans about the hidden taxes that
increase the cost of everything. Republicans could parlay it into a
general anti-tax movement.
Of course, Republicans would have to get serious about cutting
spending and earmarks before they could do this, so it's never
going to happen.
topics:
Taxes, Transportation, Television, Earmarks, Iran, Energy, Alaska, Oil
