Oil prices: Tax holidays may be costly

It’s such a rare thing for politicians to actually attempt to help average people that voters may be feeling a bit overwhelmed at the sudden propagation of plans to cut back gasoline taxes.

Hillary Clinton and John McCain have both gotten behind the idea of a federal gasoline tax “holiday.” Now, several states, which often inflict much higher taxes than do the feds, are considering following suit.

The governor of Florida has been fighting to get a two-week drop of 10 cents in July. Legislators in Missouri, Texas and New York are also working on tax holiday proposals. The idea has also caught on in North Carolina and Indiana, where gubernatorial candidates have debated various proposals.

“It’s about trying to serve the people and trying to understand and have caring, compassionate hearts for what they’re dealing with at the kitchen table,” said Florida Gov. Charlie Crist, a Republican, according to the New York Times.

Presidential candidate Barack Obama, who has built his campaign on bringing “hope” and “change” to the middle class and poor, has dismissed the idea of a gas-tax holiday as a stunt.

He’s probably right that such efforts are just political moves designed to look good but not really allow government revenues to suffer. If any politicians were serious about lowering gas prices, federal and state taxes would be permanently limited, and Congress would stop obstructing drilling in our own oil fields.

And such tax holidays won’t likely produce much savings for consumers. For example, a 10-cent reduction in the sales tax over two weeks, for a car with a 15-gallon tank that was filled up three times in that holiday period would only produce a savings of $4.50.

Plus, there’s a great likelihood that such plans could backfire. When tax holidays were enacted in Illinois and Indiana in 2000, and Florida in 2004, drivers began hoarding gasoline, knowing that the price was going to go up again soon. The result was that demand rose, and so did the price of gasoline, even without the tax.

Only a permanent tax cut would provide any real long-term savings, but good luck finding politicians who are disciplined and honest enough to make the corresponding cuts to government spending that would allow a decrease of taxes.

A far better plan for helping consumers would be to inject some common sense into our energy discussions by abandoning goofy global warming legislation and low-efficiency “alternative” energy sources, developing our own resources and stop diverting corn for fuel, which has in turn driven up food prices across the board.

It’s probably the only thing Obama’s ever gotten right in his campaign, possibly in his entire career, but gas tax holidays, though popular, may turn out to be just costly gimmicks.