Commentary: Gas tax moratorium would cost too much | St. Louis Public Radio

Commentary: Gas tax moratorium would cost too much

May 13, 2008

This article first appeared in the St. Louis Beacon, May 13, 2008: Recent calls by presidential candidates for a summertime moratorium on gas taxes are misguided and misleading. Sens. John McCain and Hillary Clinton have backed a moratorium on the federal gas tax during the Memorial Day through Labor Day period.

Not to be outdone, several states have jumped on the bandwagon. Lawmakers in Florida, Missouri, New York and Texas have called for partial or complete suspension of their state gas tax for the summer. While usually couched in terms of saving the consumer money, Florida Gov. Charlie Crist, a Republican, is refreshingly honest: "I'm supposed to respond to the people and try to make them happy."

You've probably heard calculations of the projected savings from the gas tax holiday. Using the Boston Globe's online calculator, I plugged in my weekly commute (350 miles), my miles-per-gallon (30) and found that under the McCain plan my savings would be a little over $2.15 a week. In other words, less than a Big Mac a week. If you are driving a low-mileage truck or SUV you'll save more -- maybe a meal deal -- but not much.

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I am not averse to saving money. But at what cost? What has been lost in the rush to look like the champion of the middle class is the hidden cost of buying your vote. Estimates of the lost revenue to the federal government are around $10 billion. If everyone applied and received their reimbursement, Missouri's moratorium would cost the state upward of $120 million.

These figures will cause some knee-jerk reactions. You know: It's always better for consumers if fewer dollars go to the government. In this case such a response is wrong, with one important caveat.

The federal gas tax is earmarked for the Highway Trust Fund. Established in 1956, the fund funnels revenue collected from federal gas and transportation taxes to finance the construction and maintenance of the interstate highway system. Although the tax was supposed to be eliminated by 1969, the projected completion date for the highway system, it survived. It not only survived but has been increased over time, from 3 cents in 1956 to its current 18.4 cents per gallon.

Reducing the tax revenues flowing into the fund shortchanges the public. If funds are cut, where will we find the money needed to maintain and improve the highway system? Some, me included, have advocated toll roads as an efficient pricing mechanism. But the recent maelstrom created by such suggestions to fund the new Illinois-Missouri bridge show that economic efficiency usually gives way to political expediency. If tolls are not politically palatable, how will we fund needed highway and bridge repair if we eliminate the source of revenue, even just for the summer?

A recent report by a federal commission called for a 40-cent increase in the federal gas tax over the next five years. The commission found that not only is the highway system in disrepair, but the existing tax structure is not sufficient to generate the funds needed to make critical repairs. The current gas tax, adjusted for inflation, is actually less than it was in the early 1990s. While the cost of building and maintaining our interstate highway system has risen with inflation, the tax has not. To keep the highway system safe, the commission's call for an increase in the tax is sensible and probably overdue.

But here's the caveat. Initially intended to fund highway construction and maintenance, the fund now doles out millions for pedestrian and bike paths and for mass transit projects in a few metropolitan areas. Phil Kerpen, writing online for the National Review , reports that the 2005 highway bill diverted more than $20 million in federal gas taxes to more than 6,300 pet projects. In last year's appropriations bill, the Democratic majority simply emulated the Republicans. Based on data from Taxpayers for Common Sense, another 1,400 earmarks were tacked on to the 2005 list. While some are legitimate requests, many are not.

Political posturing to garner votes is shortsighted and ignores a crumbling transportation infrastructure. Instead of tax cuts to suppress grumbling at the pump (which it won't) where's the political will to reduce the pork and put our gas tax dollars to work for what they were intended?

R.W. Hafer chairs the department of economics and finance at Southern Illinois University Edwardsville.