Gas-Tax

In times like these politics flirts with economics, and we are forced to examine why our world leaders are not finance majors. While it should not be a requirement, it should be a requirement that you consult with a finance guru before making dumb statements. A politician said over the weekend, that if America gave its citizens relief form high gas prices by suspending the gas-tax, that that may lead to increased demand and effectively squeeze supply therefore leading to even higher prices.

Wow is that a dumb thought. I don't know anyone who wouldn't welcome an 18.3 cents per gallon break the next time they fill up. And what makes this even better is that we can force the oil companies to re-pay the government the lost revenue. Exxon, BP, and Shell are not hurting for cash. Let's take a lesson from the Chinese, play by our rules or get out.

Back to the politics of it all, Obama called the gas-tax holiday a ``classic Washington gimmick'' that would do little to help consumers. Clinton said her plan would provide much-needed relief and her campaign said the Illinois senator's opposition shows he's out of touch with average Americans.

The Democratic presidential candidates made hour-long appearances on Sunday morning talk shows as they make a final push for voters in Indiana and North Carolina. Clinton is counting on winning the two states to maintain the momentum she gained with her Pennsylvania victory last month, while Obama is seeking to prove he can appeal to blue-collar voters.

The candidates also traded jabs over Clinton's threats to ``obliterate'' Iran if the Islamic state attacks Israel, while Obama distanced himself from Jeremiah Wright, saying his former pastor appears to be enjoying the media spotlight.

Obama said Clinton is pandering to primary voters by pushing a summer gas-tax moratorium that would do little to help consumers

Recent History

In the wake of Hurricane Katrina and the devastation that has followed, consumers are feeling the economic consequences of the disaster. Record gasoline prices are constantly in the headlines, which leaves many asking why prices are so high. While supply and demand are the primary determinants of gasoline prices, a significant portion of the price consumers pay at the pump can be attributed to gasoline taxes. In fact, the federal gas tax alone equals 18.4 cents for every gallon purchased.

In 1932, the federal government imposed the first federal gas tax. It began as a temporary levy with a rate of just 1 cent per gallon. Over the years, the tax burden has increased significantly. The Revenue Act of 1941 made the federal gas tax permanent and increased the rate to 1.5 cents per gallon to help fund the war effort. A decade later in 1951, the tax was increased to 2 cents per gallon to assist in the funding of the Korean War.

After President Eisenhower’s idea of an interstate highway system had been instituted, the federal gas tax was raised to 4 cents per gallon in 1959. As recent as 1981, the federal gas tax remained at 4 cents per gallon. Significant tax increases in 1982, 1990 and 1993 increased the federal gas tax by 14.4 cents per gallon, or 360 percent from 1981 levels.

In 1919, Oregon became the first state in the nation to place a tax on gasoline and every state has subsequently adopted this form of taxation. This year, according to the Energy Information Administration the average state gas tax is 20.8 cents per gallon. In addition to statewide taxes, often consumers pay local excise taxes on gasoline purchases