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JAGas Tax Holiday Proposed
Faced with increasing fuel costs, presidential candidates Hillary Clinton and John McCain have recommended suspending the federal gas tax, the revenue from which is used to maintain federal highways and bridges. Under the plan, the tax, which stands at 18.4 cents for gas and 24.4 cents for diesel, would be suspended for the summer months to lessen the cost during the peak demand season. Democratic hopeful, Barack Obama, has come out against the suspending the tax, saying that there would be very little benefit.
Some analysts think that drivers are unlikely to see any substantial changes in fuel prices because there is no guarantee the savings would be passed on at the pump. If the tax was suspended, there would be no way for the government to enforce the lowering of prices. Many gas stations owners, who run on a low profit margin, would be tempted to increase profits by maintaining higher prices. Other analysts foresee problems down the road in the form or cheaper gas, which would increase demand and once again raise prices.
While supporting the suspension, Clinton and McCain have different views about how to make up for the loss of revenue. McCain is in favor of diverting funds from general government revenues to pay for transportation projects funded by the tax while Clinton stated that she would levy a windfall profits tax on oil companies. President Bush stated this week that he is looking into the issue, but many in Congress think that the plan would have little or no effect on prices.
