- The Washington Times - Thursday, March 23, 2000

The American Automobile Association ostensibly a group devoted to advocating the interests of American motorists has come out against repealing the federal tax of 4.3 cent per gallon tax imposed by the Clinton administration several years ago. "While attractive at first glance, it will not address the root cause of the problem, which is lack of supply due to the [oil-producing nations'] cartel," said Susan Pikrallidas, AAA vice president of public and government relations. "The benefits to motorists from reducing the gas tax are minimal repealing 4.3 cents per gallon would amount to about $1 per week for the average consumer," she added. "However, the resulting loss of revenue to the highway trust fund would be disastrous to the important work of fixing the nation's highways and bridges and improving safety."

For similar reasons, congressional Republicans have likewise abandoned the idea of repealing the near nickel-per-gallon levy as well. AAA blamed the Organization of Petroleum Exporting Countries (OPEC) as well as low inventories that have left the United States vulnerable to price/supply manipulations by the oil cartel. "If history has proven anything, it's that OPEC can hamstring our economy enough without inadequate inventories adding to the problem," Miss Pikrallidas said.

While AAA is correct about the relative insignificance of the 4.3 cent federal gas tax, the cumulative effect of state-level and other motor fuel taxes which can easily amount to 50-70 cents of the per-gallon cost of gasoline or diesel in states such as California or Connecticut are exorbitant and should be scaled back. Any tax that represents more than 20 percent of the retail price of a consumer commodity is excessive. Imagine if a $2 hamburger carried with it a sales tax of 40-cents. Yet AAA made no mention of these taxes indeed, its message appears to be that motor fuels taxes are a good thing: "The resulting loss of revenue to the highway trust fund" resulting from lower motor fuels taxes "would be disastrous to the important work of fixing the nation's highways and bridges and improving safety," said Miss Pikrallidas. "Short-term fixes, while politically popular, are not in the best interests of highway safety and the overall economic well-being of the nation."

Well, given the linchpin role that energy plays in the American economy, it's certainly debatable whether "short-term political fixes" such as lowering the already confiscatory taxes on motor fuels is less important than pouring yet more revenue into state and federal coffers. With the federal treasury and many state treasuries as well awash in surplus tax revenue, it would seem that a little relief could be passed along to motorists without putting too much strain on the nation's road infrastructure. It's rather surprising that GOP leaders and AAA can't bring themselves to endorse such a position.

The summer driving season is now but weeks away and many experts and industry analysts expect the per-gallon cost of regular unleaded to creep up as high as $2.50. Diesel fuel costs have already risen to such an extent that many commercial truckers are operating at a loss. If the critics believe that the savings from cutting taxes are so small and negligible, just $1 per week per driver, then the feds shouldn't mind giving such a small amount back. Better yet, they should start cutting the rest of the gas tax too. The sooner they get started, the better.

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