Gas Prices and the Government

We've all seen the spike in gas prices, especially since the supply disruptions stemming from Katrina.  We have also seen numerous calls by Democrats (Chuck Schumer comes to mind) asking for the President to release the Strategic Reserves to lower prices.  We also know that there is a good chance even that act would do little to alleviate prices in normal circumstances (where production issues are not in place due to infrastructure damage).

So what does this all mean and why am I talking about it?  Because yesterday I was thinking about gas taxes.  Every state and the federal government impose taxes on gas per gallon.  So I did a little search and found this site laying out state gas taxes.  Note the feds charge 18.4 cents per gallon.  And it occurred to me that the most effective, and quickest, way to reduce gas prices and provide relief to the average citizen is for both state and federal governments to waive part or all of their gas taxes at least temporarily.  It's the perfect Republican/conservative policy - lower taxes always work for Republicans.  And there's no way such a move could be labeled "tax relief for the rich."  Sure there would be a hit to tax revenue, but aren't these the kind of times when we actually need to take these steps?

In many states, the relief could be significant - California totals 50 cents a gallon, NY almost 49 cents, Florida 48 - and a three-month suspension (lasting until the end of the year) would be most welcome.  It also might help to then reinstitute the taxes in a phased in manner, adding a portion of the tax back each month, to prevent a sudden price shock come January.

I can only wonder why this hasn't been seriously discussed in Congress or the larger states.

Comments

[james larkin]

In England and other countries the national gasoline tax paid at the pump is PER GALLON. Hence, the tax cost doesn't vary even when prices rise.
Here, the tax is on the total price paid -- meaning the tax fee goes up w/the price of gas.
The costlier the gas price, the more tax collected.
So, here, when gas goes up, we are doubly burdened by both the higher gas price and a higher tax.
Any thoughts on that?
jl