House Panel O.K.s Temporary Gas Tax Cut

05/10/96

Without a way to make up for lost revenue and no guarantee that consumers would ever see a penny's worth of difference in the actual price of gasoline, Republicans on the tax writing panel in the U.S. House of Representatives voted to temporarily rescind 4.3 cents per gallon worth of gasoline tax.

The measure which, would reduce the federal gasoline tax by 4.3 cents per gallon until Jan. 1, 1997, would increase the budget deficit by $2.9 billion dollars. Potential benefits to the average consumer amount to $2.15 cents per month, but there is no guarantee that the benefit would ever show up on the pump.

A similar plan raised by Bob Dole in the Senate was blocked by Senate democrats after Dole refused to couple it with a 90 cent raise in the minimum wage. The Senate plan differed from the House's, in that it suggested ways of recouping the revenue that would be lost under the cut. Republican Senators have suggested that the 6 month tax cut should be paid for over the next 5 years (until 2002) by administratively restructuring the Department of energy, and by auctioning off more publicly owned broadcast frequencies.

The republican drive to cut gas taxes started out from the premise that such cuts should be permanent. The White House has pointed out, however, that a permanent cut in the gas tax would cost the federal government $30 billion over the next seven years alone. The permanent gas tax was expected to show up in the Republican 1997 budget proposal, which was unveiled on Wednesday, but it did not. Additionally republicans in the House Tax Writing Committee voted against a push to extend the gas tax to 2002 (voting 24-8), offering further evidence that republicans are backing down from the idea that a permanent cut in the gas tax makes sense against the backdrop of the budget deficits.

Democrats have repeatedly dismissed republican efforts to cut the gas tax as little more than election year posturing.

Paul Dever -- The Auto Channel