House Says No to Gas Tax Hike

Falling fuel prices over the past few years have benefited Americans of all income levels. Unfortunately, a $10 per barrel tax on oil, proposed by the Obama Administration threatens to undo these economic gains and raise fuel costs for consumers.

The proposed tax would be used to fund the President’s “21st Century Clean Transportation Plan,” an ambitious expansion of past failed policies. The list includes high speed rail, the National Infrastructure Investment Program, and government backed research and investment programs that have repeatedly hurt taxpayers and distorted markets.

While the pain from such a tax would be widespread, like so many other revenue-grabs, this new oil tax would have a disproportionate impact on the poor, who spend a higher percentage of their pretax income on fuel. As of 2014, the lowest quintile of Americans spent roughly 11 percent of their income on fuel costs, compared to the average household who only paid out 4 percent. The recent dip in gas prices has meant significant savings, particularly for low-income earners. Declining prices at the pump have saved the average American household  $700 a year, down from the high point in April 2014 when consumers paid $3.70 per gallon.

Unfortunately, some have perceived these gains by consumers to be an opportunity for higher taxes. The 21st Century Clean Transportation Plan $10 per barrel oil tax would  increase fuel prices by roughly 22 cents per gallon, virtually eliminating the economic relief the current crude surplus has afforded. Low income earners, who have benefited the most over the last few years as the percentage of their income spent on fuel costs has fallen, would feel this pinch the most. It would also erode the petroleum industry’s already thin to non-existent profit margins, further, making it harder for this vital sector to recover.

Fortunately, the House took two important steps to protect taxpayers wallets from this new energy tax. First, they have passed Congressman Paul Gosar’s 21st Century Clean Transportation Plan Amendment, amending the Energy and Water Development Appropriations Act to prohibit the Department of Energy from implementing the President’s plan. Second, the House passed H.Con.Res. 112 with bipartisan support, which voices opposition to the proposed tax hike.

In conclusion, these actions on the part of the House are excellent means to ensure American families of all income levels can continue to enjoy low fuel prices, rather than be burdened by higher prices, as a direct result of government taxation.