The Merits of Repealing the 1993 Gasoline Tax

In 1993, with deficit reduction a primary goal, this excise fuel tax was increased an additional 4.3 cents to be paid to the General Fund. This additional excise tax can be significant. To fill up an average car, for example, the excise tax adds about 75 cents to every tank of gas.

Gasoline and other motor fuel prices have increased dramatically since the beginning of 1996. The Department of Energy reports that average national regular unleaded gasoline prices have increased from $1.09 per gallon January 1996 to $1.28 per gallon in May 1996--a 17 percent increase. Prices in some regions of the United States have increased even more dramatically (Archer, 1996, pp. 3-5). There have been reports of some service stations in California, for example, charging as much as $2 per gallon.

This shocking rise in gasoline prices have brought a wave of public criticism. This outcry has encouraged the federal government to take steps to moderate the impact on consumers. In April, the U.S. Justice Department announced that it will investigate whether oil companies are illegally conspiring to push up oil prices (Cooper, 1996, p. 1). It is not likely that the Justice Department will find evidence of collusion, which is illegal under anti-trust laws. Executives of the oil companies have asserted that the prices are merely reflecting supply-and-demand. There are valid reasons for suspecting th

It is well known that small businesses face many hurdles. Nearly half of all small businesses fail within five years (Scarborough & Zimmerer, 1993). Yet, with these difficult odds, small businesses frequently play little role in the public policy arena. Given the large size of the small business community, coupled with rising regulatory activity, it is due time that small businesses organize an effective lobbying bloc. A small business lobbying bloc could be a powerful influence behind the 1993 gas tax repeal.

 

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