Gas Tax Demagoguery

Put me down on the no tax holiday side of the federal gas tax holiday divide:

WASHINGTON — As angry truckers encircled the Capitol in a horn-blaring caravan and consumers across the country agonized over $60 fill-ups, the issue of high fuel prices flared on the campaign trail on Monday, sharply dividing the two Democratic candidates.

Senator Hillary Rodham Clinton lined up with Senator John McCain, the presumptive Republican nominee for president, in endorsing a plan to suspend the federal excise tax on gasoline, 18.4 cents a gallon, for the summer travel season. But Senator Barack Obama, Mrs. Clinton’s Democratic rival, spoke out firmly against the proposal, saying it would save consumers little and do nothing to curtail oil consumption and imports.

The adverse effects of the holiday outweigh the benefits.

I know it’s indelicate of me to mention this and I genuinely sympathize with the situation that truckers find themselves in over rising gas prices but isn’t the entire trucking industry highly dependent on a dizzying network of government subsidies? The most obvious is the interstate highway system, for which the federal government already pays more than it receives in the form of federal excise tax revenues. The tax holiday would just exacerbate that problem.

Without the ridiculous federal regulations and bizarre labor contracts that burden the rail industry it seems to me that rail is intrinsically enormously more efficient for transporting goods than either air or interstate trucking. I’d certainly be interested in seeing a comparative analysis of the costs. Rather than increasing the truckers’ subsidies it may be time to begin the inevitable transition.

One of the problems we have in getting rid of bad policies is that there are entire industries that depend on the economic niches created by the policies and will defend them to the death.

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