ACP Pubs

Michael Larson

Gas-Tax Holiday Would Be No Picnic For Wisconsin Highway Construction
May 6, 2008

Although well intentioned, the gas-tax holiday proposed by Senator McCain last month would actually do more harm than good for Wisconsin’s highway and utility construction industry.

The proposal suggests eliminating the 18.4-cent-per-gallon federal tax on gasoline and the 24-cent-per-gallon federal tax on diesel fuel from Memorial Day to Labor Day as a way to put more money in consumers’ pockets in order to stimulate spending.

While this sounds good on the surface, the fact is that the gas-tax money the federal government takes out of our pockets with one hand, it puts back into transportation construction with the other.

The federal tax on gasoline is just under 5.2%, based on today’s $3.54 per gallon cost. And the federal tax on diesel fuel is just under 5.8%, based on a $4.15 per gallon price.

(Our own state gas tax, by comparison, is 32.9 cents a gallon, or 9.3%.)

ARTBA estimates that eliminating the federal gas tax -- which hasn’t increased since 1993, by the way – would save the average driver about $30. Certainly, anyone running a dump truck, bulldozer, or grader daily would save substantially more. But in the end, the few cents a gallon will not add up to huge money over three months.

The plan’s detrimental impact on the federal highway fund – and the money it returns to states for highway work will be huge. ARTBA estimates that the three-month moratorium will cut $9 billion from the fund, which in turn will mean billions less coming back to states like Wisconsin to help support highway work.

In fact, estimates say that over the next few years, that three-month relief from the minimal gas tax will cost Wisconsin more than $137 million in federal highway aid and eliminate nearly 4,800 construction-related jobs.

That’s a far higher price to pay in the long run. Too high, in my opinion.

On top of that, there’s no guarantee that the oil companies won’t keep raising their prices, more than eating up the tiny savings that would come from temporarily eliminating the minimal tax.

Although I’m sure Senator McCain’s proposal is well intentioned and sincere, I think it would deliver terrible consequences to Wisconsin’s transportation-construction industry.

What’s your opinion?

Posted by Michael Larson on May 6, 2008 | Comments (0)