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Reason Foundation

McCain's Gas Tax Holiday Is a Bad Joke

Robert Poole
April 15, 2008, 8:48am

I was flabbergasted by John McCain's proposal to suspend collection of the federal gas tax for this summer. Suspending this user tax would deprive the Highway Trust Fund of $8-10 billion in much-needed revenue to patch potholes, rebuild failing bridges, and keep the Interstates and other key arteries from further declines in their already pathetic levels of performance. And this comes at a time when the Trust Fund is already facing a 2009 shortfall of $2-3 billion (thanks to Congress legislating more highway spending than existing gas-tax revenues can support). Plus, since the gas tax is only about 5% of the cost of a gallon of gas, the savings to motorists would be trivial. McCain's advisors have rushed forward with damage control, promising a legislative proposal that would hold the Trust Fund harmless by replacing the lost gas-tax revenue with general fund money, thereby adding another $8-10 billion to this year's ballooning deficit. That would at least make the proposal less irresponsible from a transportation policy standpoint. If politicians want to offer goodies of this kind, they should make everybody pay for them, rather than short-changing highway users. But this episode illustrates once again why motorists are losing trust in the Highway Trust Fund. Every time Congress acts on this subject, they further politicize transportation funding, turning what was once a nearly pure user fee (to build the Interstate system) into a New Deal-style public works boondoggle. The longer-term solution is to scrap the 20th-century tax-and-grant system in favor of universal tolling, managed by each state's Department of Transportation and private toll companies. Reason's Transportation Research and Commentary

Robert Poole is Searle Freedom Trust Transportation Fellow and Director of Transportation Policy


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