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101 IRET Congressional Advisory 1 (2000)

handle is hein.taxfoundation/iretcgadv0098 and id is 1 raw text is: March 14, 2000 No. 101 GASOLINE PRICES AND CLINTON'S CROCODILE TEARS The price of energy is up - way up. OPEC is squeezing output and boosting prices. Nationwide, the average price of gasoline has gone from a low of well below a dollar a gallon one year ago to somewhere around $1.60 today, and may be headed for $2.00 or more by summer. Similar stories can be told regarding the price of home Te heating oil and natural gas. f Each night the evening news up... A ..pract features a different story about which the goi the hardships being suffered by without any / Americans. Truckers who are would be to ci having to pay higher prices for gasoline... gasoline and the elderly and concerned ab the poor who are having to to gasoline coi find ways to afford higher reason to limit heating bills are all looking to 4.3 cent Go, Washington for help. And clearly, the Clinton Administration seems to feel their pain, freeing-up government money to assist in their plight and expressing its concern about the high prices by sending Administration officials to discuss the problem with oil-producing countries. A more practical response, government can enact without overseas, would be to cut the one which the any help from federal tax on gasoline. The federal gasoline tax is 18.4 cents per gallon, and 24.4 cents a gallon for diesel fuel. The tax is supposedly reserved for road construction, but has been collected in amounts that exceed spending on highways, with the excess used to finance general government. In 1993, the gasoline tax was raised by 4.3 cents per gallon and a previously enacted temporary 2.5 cent portion of the gas tax was made permanent. The tax hike passed the Senate by a single vote when Vice President Gore voted for it to break a tie. Republicans, and some House Democrats, are talking about suspending the 4.3 cent Gore tax through the end of the year. If Washington is concerned about providing relief to gasoline consumers, there is no reason to limit the tax relief to the 4.3 cent Gore tax, or to make the suspension temporary. It is not clear how the Clinton Administration would react to a proposal to cut the gas tax. Given President Clinton's dedication to the United ner-gy is up - way ical resonse, one 'emwinent can enact ell) fomn overseas, it the federal tax on SWashington is out proiding relief nisumers, there is no the tax relief to the *e tax', or- to mnake ltempor'ary. all life on earth) Nation's Global Climate Treaty, one might suspect that he is shedding crocodile tears over the rise in the market price. The Treaty, known as the Kyoto Protocol, would force Americans to make massive reductions in their use of oil and coal. The purpose of these reductions would be to reduce U.S. emissions of carbon dioxide by about 35% over the next decade. The theory, which has not been born out by actual climate data, is that increases in atmospheric CO2 (necessary for will increase global temperatures by about 4 degrees over the next 100 years. So how could people be induced to make such a significant decrease in their use of oil and coal? The answer is by increasing the price. This would be done through a significant tax increase on oil, gasoline, and coal - a so called carbon tax - or Institute for Research on the Economics of Taxation IRET is a non-profit, tax exempt 501(c)(3) economic policy research and educational organization devoted to informing the public about policies that will promote economic growth and efficient operation of the free market economy. 1730 K Street, NV., Suite 910, Washington, D.C. 20006 Voice 202-463-1400 e Fax 202-463-6199 0 Internet www.iret.org

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