As part of an effort to soften the financial stress on Americans, presumptive Republican presidential nominee Sen. John McCain is proposing that from Memorial Day to Labor Day the federal government suspend all motor fuel taxes and suspend purchases of oil for the Strategic Petroleum Reserve (SPR). McCain included the proposals in an economic plan he outlined in a “Tax Day” (April 15) speech at Carnegie Mellon University in Pittsburgh.
Technically, McCain called for just a suspension on “all taxes on gasoline,” but another comment in his speech makes it clear that he intends for the summer tax holiday to apply to the tax on diesel fuel as well.
“The effect will be an immediate economic stimulus – taking a few dollars off the price of a tank of gas every time a family, a farmer, or trucker stops to fill up.”
Purchasing of oil for the SPR contributes to the rising price of oil, McCain said, adding that “there are larger problems underlying the price of oil, all of which I will address in my energy plan.” The combination of the tax holiday and the suspension of deposits into the SPR “will bring a timely reduction in the price of gasoline,” McCain declared. “And because the cost of gas affects the price of food, packaging, and just about everything else, these immediate steps will help to spread relief across the American economy.”
Leaders of a key committee in the House of Representatives slammed McCain’s proposal, saying it would have little effect on gas prices but would cost states billions of dollars in highway safety and construction funds, costing construction jobs and increasing congestion.
Reps. James Oberstar (D-Minn.) and Peter DeFazio (D-Ore.), chairmen of the House Transportation & Infrastructure Committee and its highways subcommittee, respectively, noted that when the 18.3-cent federal gas tax was established, the average price for a gallon of gasoline was $1.05. Now that the average price is about $3.39, that 18.3 cents doesn’t have much impact on a percentage basis, they suggested in a joint statement.
“Sen. McCain has said he doesn’t understand the economy. His gas tax proposal proves that point,” Oberstar and DeFazio said. “The McCain proposal would bring the Highway Trust Fund, which finances Federal highway, highway safety, and transit infrastructure investments, to the edge of insolvency.” In addition, there’s no requirement that the price of gasoline actually drop, “making it likely that oil companies would simply pocket the difference.”