McCain calls for suspension of federal gasoline tax

April 21, 2008
US Sen. John McCain (R-Ariz.), the presumed 2008 Republican presidential nominee, called for a suspension of federal gasoline taxes from Memorial Day to Labor Day as an economic improvement measure.

US Sen. John McCain (R-Ariz.), the presumed 2008 Republican presidential nominee, called for a suspension of federal gasoline taxes from Memorial Day to Labor Day as an economic improvement measure.

“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 a trucker stops to fill up,” he said in remarks scheduled for delivery Apr. 15 as part of a larger economic address at Carnegie Mellon University in Pittsburgh.

Suspending federal excise taxes would reduce retail gasoline prices by 18.4¢/gal and diesel fuel prices by 24.4¢/gal, according to the US Energy Information Administration.

The federal government should also suspend crude oil purchases for the Strategic Petroleum Reserve during that same period, he continued. “This measure, combined with the summer-long gas tax holiday, will bring a timely reduction in the price of gasoline. 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,” McCain said.

But an environmental lobbying group said that the proposal to suspend motor fuel taxes raises more questions than answers. McCain’s plan would cut $11 billion in highway funding that is critically needed, the League of Conservation Voters said.

“If Sen. McCain wants to save money for American taxpayers, he should get to the root of the problem: massive taxpayer-funded subsidies to huge oil companies that are already making tens of billions of dollars each year. The answer to the high cost of gas is not temporary tax maneuvering; it is a fundamental shift away from oil and towards clean, renewable energy,” LCV President Gene Karpinski said.

House response

Following McCain’s proposal, two leading Democrats on the House Transportation and Infrastructure Committee said suspending federal gasoline taxes this summer would do little good but cause significant harm.

The proposal would save most drivers less than $30 for the entire season while costing states $12 billion in highway construction, highway safety, and public transit funding, Chairman James L. Oberstar (D-Minn.) and Peter A. DeFazio (D-Ore.), chairman of the committee’s Highways and Transit Subcommittee.

“This shortfall will have very real, devastating effects for hundreds of thousands of American families. McCain’s proposal will eliminate approximately 300,000 family-wage, highway construction-related jobs. It comes at a time when, according to the Bureau of Labor Statistics, 1.2 million construction workers are already unemployed. In fact, the construction sector has the highest unemployment rate (12%) of any industrial sector,” they said in a joint statement issued by the committee.

Suspending the taxes of 18.4¢/gal on gasoline and 24.4¢/gal on diesel fuel from Memorial Day to Labor Day, as McCain proposed, also would harm efforts to reduce highway congestion by eliminating necessary infrastructure improvement investments, Oberstar and DeFazio said.

“Despite its stated purpose, the proposal would actually do little for consumers. Instead, it is likely to turn into just another multibillion windfall profit for the oil companies,” they said. This essentially happened in 2001, when Illinois and Indiana suspended their motor fuel sales taxes, they said.

“The McCain proposal is nothing more than an attempt to find a simple sound bit instead of a realistic solution,” Oberstar and DeFazio maintained. “It brings to mind the words of H.L. Mencken: ‘There is always an easy solution to every human problem—neat, plausible, and wrong.’”