Both John McCain and Hillary Clinton are proposing a new Gas Tax Holiday that will run during the summer months, bringing “much needed relief” at the pumps. But will it? More than 200 economists, including four Nobel prize-winners, have already signed a letter rejecting the proposal.

The Gas Tax Holiday is yet another way politicians pander to the public, with an idea that on the surface sounds like a money-saver , but after a few seconds of consideration is actually pointless. It’s just a cheap way to buy your vote. It's an illusion.

The federal gas tax is 18.4 cents per gallon. Suspending the gas tax over the summer would save the average American around $30, according to Congressional Budget Office. That’s roughly 33 cents per day.

To me, that’s not a whole lot of cash. To people who are on the poverty line, it is. So I don’t want to dismiss it straight away. For a smart shopper, that’s enough to buy plenty of groceries. But we can’t just take it as read that people will see one cent of that money.

Fuzzy math
One of the main reasons economists are up in arms about the tax cut is that the knock-on effect has not been accounted for. Basic physics states that for every reaction, there is an equal and opposite reaction. So, if we cut the gas tax and prices go down, what happens; demand increases. Maybe not by much, on a 13-gallon tank you’re saving enough to buy a loaf of bread. But the illusion of savings will be enough to ‘drive’ more people to the pumps. And when demand increases, so does the price of gasoline. It happens every year.

So, it’s highly feasible that if/when the gas tax is eliminated, the price of a gallon of gas will remain the same or actually increase. And it’s those mega-rich oil companies that will reap the rewards. Oil companies that already report record-breaking profits and still receive grants and tax breaks from the government.

Furthermore, what happens to all the services that would have been paid for by the gas tax? Which roads will not get repaired? Which bridges will be allowed to stay in a state of disrepair? Oh wait…don’t tell me…our government will borrow the money, thus weakening our already dying economy even further. Or they’ll just let the infrastructure crumble.

I’m no economist, anyone will tell you that. But I don’t have to be. I have over 200 esteemed economists backing the argument and I for one don’t intend to stay quiet about it. Enough is enough Washington. Republican or Democrat, we need to make a stand and let them know we’re smarter than that, and they can’t buy our vote.

There is currently a petition out on the web asking for your signature. Here’s an excerpt from the petition:

Eliminating the federal gas tax all summer would only save American consumers about 30 dollars, send more money overseas, reduce our ability to invest in infrastructure, and encourage even more driving and pollution contributing to global climate change. At the end of the summer, gas prices would be as high or higher than before and no problems will be solved.

The only way to save Americans from spending huge sums on gas is to reduce the gas Americans use. We need to invest in alternative sources of energy. We need to build more fuel-efficient cars. And we need to make it easier for more Americans to accomplish everyday tasks without having to drive.

 

 

 

I have signed it. Over 1460 other people have signed it, too. You can find it here , and if we all get behind it maybe we can stop this insanity from happening. As Gandhi once said, “you must be the change you wish to see in the world.”

http://www.gastaxscam.com/letter.html
http://blog.wired.com/cars/2008/04/gas-tax-holiday.html
http://www.bloomberg.com/apps/news?pid=20601087&sid=aTzCmqCNyLho&refer=home
http://www.boston.com/business/ticker/2008/05/mit_prof_a_gas.html
http://firstread.msnbc.msn.com/archive/2008/04/29/958462.aspx