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Monday, May 05, 2008

Gas Tax

Suspension of the Gas tax for the summer do little to help people at the pump. The Congressional budge office predicts that it would save maybe $30 per family over the summer. It would have a minimal if any effect on the price of goods (prices have been increasing because of transportation costs) because it is a short term tax break and would be so minimal for truckers. Yes, Obama was (possibly) incorrect that Hillary's plan to suspend the tax for the summer would increase Oil Company profits. However, that still does not mean it will decrease the costs of anything. Sure we won't be paying the gas tax, but oil companies, knowing a tax hit is coming to them would be sure to keep pre-tax prices high in order to retain their profits for their shareholders. Overall, such a short term fix woudl have little or no effect.

I propose a slightly different method. Suspend the diesel tax for a period of at least a year (with a rider that says it will be reinstated if the price drops below a certain set amount). This would have a significant effect on the costs of good becuase it would lower transportation costs and be in effect for long enough to actually affect prices. You could do the same for air plane fuel. The price of truck and airplane transportation has a much greater potential to cause serious harm to our economy than gasoline prices. The high gasoline prices are already causing people to buy new more fuel efficient cars replacing some of the higher fuel cost vehicles. However, if consumer prices continue to rise due to the diesel and airplane fuel costs than people will not even be able to afford more fuel efficient cars.

Something needs to be done, but a short term suspension of the gas tax is not the answer.