Posts Tagged ‘Gas Tax Holiday’

Gas Stamps Would Be Better than a Gas Tax Holiday

May 2, 2008

Senators McCain and Clinton have both recently proposed a “Gas Tax Holiday” under which the 18.4 cent-per-gallon federal gasoline tax would be suspended this summer to help ameliorate the high costs of gasoline.  Senator Obama has rightly opposed this proposal, arguing that any reduction in gas prices (which many economists argue would not even occur) would only amount to $25-30 per driver this summer and is insufficient to really counter $4-per-gallon gas.  He and others have also argued that the tax holiday would reduce the funds available to repair our roads and bridges and encourage more driving at a time when we need to discourage driving.

Supporters of McCain and Clinton argue that Obama’s opposition to a Gas Tax Holiday shows that he is out of touch with the issues facing ordinary people, especially those with low incomes.  They imply that a savings of $30 issignificant to poor families and that Obama is too rich or detached to realize this.  I believe this is just political posturing on their part.  If the gas tax were suspended for 3 months and the savings were $30 as Obama suggests, that would be just $10 per month.  Given the amount of money some poor people spend on lottery tickets, cigarettes, and alcohol, I doubt this amount of money would really make a difference to most people.  Even if it would make a difference to some of them, it is clear that gas prices will keep going up and that working, low-income people need much more relief.  The only problem with Obama’s response to his opponents is that he has not really proposed an alternative policy to help poor people cope with the high price of gas.

Rather than pursuing a tax suspension that might not even lower the price of gasoline, a much better idea would be to create a Gas Stamps program for low-income people who own and drive cars in order to get to work.  This could be done quite easily by extending the current Food Stamps program.  I did some research about this program and learned that the phrase “food stamps” is an anachronism; in most states, actual stamps have been replaced by debit cards that are automatically replenished monthly and can be used at most grocery stores to buy food.  Gas stamps would really help poor people pay for their gas and would not stimulate gasoline consumption across all economic groups the way a Gas Tax Holiday would.  It could be funded with a sales tax on low-mileage cars and trucks which is something we should be implementing anyway to steer consumers toward higher mileage vehicles as part of a national policy to lower our consumption of gasoline and oil both for financial and environmental reasons.

An intersting fact about the Food Stamps program is that the government does not count a car owned by applicants when considering eligibility provided the car is used to commute to work or transport a disabled household member.  This means that the U.S. Food and Nutrition Service which administers the Food Stamps program already knows whether or not food stamp recipients own cars and how many they own, so the program could easily be extended to add a monthly gas stamp benefit to the existing food stamps debit card.  The only other thing needed to fully implement the program would be to allow gas stations to register with the program so that they could accept the food/gas stamps debit cards.

Senator Obama should propose a Gas Stamps program as a more realistic way of helping poor Americans deal with the high price of gasoline.  Doing so will show that he is more realistic about helping poor people bear the high price of gas and prevent Senators McCain and Clinton from claiming that he is insensitive or out of touch.  But he better propose this quickly before the primaries in Indiana or North Carolina.