John McCain takes tax breaks too far


John McCain is feeling generous: This week, the Republican presidential hopeful called for Congress to declare a summer-long “gas-tax holiday”. The scheme would see the federal government nix all gas and diesel taxes for three months between Memorial Day and Labor Day. That, says McCain, would be enough to restore consumer confidence and put the floundering US economy back on track.

It’s easy to be cynical about McCain’s motives: Taking the sting out of gas prices in the run-up to the November election would be sure to win the Arizona senator brownie points with cash-strapped voters. It might also allow him to steer the debate away from economic issues, while dampening down resentment over the domestic repercussions of the war in Iraq.

But regardless of McCain’s private reasons for wanting to give the American people a tax holiday, his plans are bad policy. The money raised from gas taxes is needed for essential road and bridge repairs – hardly an area in which we can afford to skimp. With the federal highway account already set to finish next year $3.2 billion in the red, even truckers agree that we need higher, not lower, gas taxes in order to keep America moving.

What’s more, it’s far from clear that a gas-tax holiday would actually help consumers. Cheaper gas would mean increased demand, which could in turn lead to higher prices as oil companies seek to maximize their profits. And even if McCain’s moratorium managed to reduce the price at the pump, the savings would be trivial: Waiving the 18.4-cent gasoline tax would do little to offset the impact of soaring oil prices.

Most troubling, though, is the message McCain’s proposals send about the seriousness of his commitment to solving global warming. The price of gas speaks, first and foremost, to the need for clean and affordable alternative energy sources; by seeking to slash the gas tax, McCain would simply legitimize America’s self-destructive thirst for foreign oil.

What’s more, McCain’s willingness to pander to voters over gas prices deeply undermines his credibility as an advocate of emissions-trading systems. After all, there’s no quicker way to wreck a carbon market than by bailing out or overcompensating companies that don’t clean up their act. If McCain is prepared to ditch his green rhetoric and hand out “holidays” at the first sign of trouble, how can we trust him to make the tough decisions needed to set up and oversee a functioning carbon market?

 

 

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