Tuesday, April 29, 2008

Does a 'gas tax holiday' make sense?

Sen. John McCain and Sen. Hillary Clinton are running in tandem, once again, having called for a “gas tax holiday” this summer. The concept would suspend the federal government's 18.4-cent-a-gallon tax on gasoline and its 24.4-cent diesel tax, between Memorial Day and Labor Day. Sen. Barack Obama has said it will not accomplish much, so he is opposed to it.

Estimates say that the “holiday” could cost the government about $10 billion in lost revenue. By not agreeing with this tax-relief proposal that has to sound good to voters, what is Obama saying?

The Washington Post looks into the proposal with its “Adding Up the Benefit Of Pennies at the Pump.”
According to James Hamilton, a professor of economics at the University of California at San Diego, the benefits of a temporary tax moratorium would probably go to oil companies rather than consumers. He said states that suspend gas taxes are able to respond to rising demand more efficiently than the country as a whole, because gasoline supplies can be easily transferred from one state to another.
Click here to read the entire piece.

Hey, if it looks like a pandering campaign ploy, if it quacks like a pandering campaign ploy...

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