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Gas Tax Hostage Situation Would Create a Windfall for Oil Companies


GasTax by xampl9, on Flickr

The New York Times editorializes on the federal gas tax today, which is a bit depressing. The tax is much smaller than in other countries around the world, and yet when it expires September 30, what is normally a routine extension could turn into another hostage situation from the Tea Party crowd.

Unless Congress extends it, the 18.4 cents-a-gallon federal gas tax will expire on Sept. 30. Allowing that to happen would be tremendously destructive. It would bankrupt the already stressed Highway Trust Fund, with devastating effects on the country’s highways, bridges, mass transit systems and the economy as a whole.

Reports suggest that some House Republicans may push to let the tax lapse or use the threat of expiration as leverage in the budget wars. This is a dangerous idea. If anything, the tax should rise to maintain a system that constantly needs upkeep — the backlog of bridges needing repair is estimated at $72 billion — creates jobs and encourages drivers to buy more fuel-efficient cars.

You would have just 10% of the revenue coming into the Highway Trust Fund without the gas tax. Heck, even Bowles-Simpson called for an increase in the gas tax, which, if it’s offset with increases in the Earned Income Tax Credit so the result isn’t as regressive, makes some sense.

As for the argument that I’m sure the wingnuts will make, the idea that eliminating the gas tax would just put money back into people’s pockets (so they can build roads?), we actually have a test case for this now, which we should remember and trot out at every opportunity. When Republicans shut down the FAA for two weeks earlier this year, it disabled the authority for the agency to collect airline ticket fees, which go toward FAA operations. Did that put money back into people’s pockets? No, the airlines simply raised their ticket prices to the level of the tax. No passenger saw a red cent in savings. When asked about this, House Majority Leader Eric Cantor defended the practices, saying merely, “That’s what business does.” Precisely – and it’s exactly what oil companies would do in the event of an expiration of the federal gas tax. This would be nothing but a transfer of cash from building highways to the coffers of the biggest and most profitable corporations in the world.

The case for increasing the gas tax (gas taxes are 10 times as high in Britain, for example) is to increase infrastructure spending and encourage more fuel-efficient cars. The case for lowering it is to benefit oil companies. Nothing more.

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David Dayen

David Dayen