facebook
twitter
rss
account
search
search
 

Report: Gas tax holiday a bad idea

July 7, 2006 at 11:18 AM   |   Comments

WASHINGTON, July 7 (UPI) -- The Tax Foundation, a private U.S. group, says gasoline tax holidays are a poor form of tax relief.

"Compared with other types of tax relief, tax holidays reduce the efficiency of the tax system and the overall economy," says economist Jonathan Williams, co-author of a report released Friday.

Florida added gasoline to its collection of tax holiday items in 2004, Georgia enacted a gasoline tax holiday in 2005 and Illinois is among a number of states where prominent lawmakers are attempting to enact such a law.

Gasoline tax holidays are intended to lower gasoline prices at the pump. However, a 1-cent temporary gasoline tax holiday will not automatically lead to a 1-cent decrease in retail gasoline prices, making holidays an ineffective way to reduce retail gasoline prices.

Lawmakers often enact gasoline tax holidays with complex accompanying rules and regulations requiring gasoline stations to lower retail prices by the full amount of the tax cut -- effectively levying a price ceiling on the retail price of gasoline, Williams said. Gas tax holidays create administrative complexity, distort market pricing and distract the public from superior tax relief measures, he said.

© 2006 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
Most Popular
1
New Navy sub ready for outfitting, testing New Navy sub ready for outfitting, testing
2
New F-35 sustainment system undergoing flight testing New F-35 sustainment system undergoing flight testing
3
Apple to authorities: No iPhone user data, even with a warrant Apple to authorities: No iPhone user data, even with a warrant
4
Scrap South Stream, Europe says Scrap South Stream, Europe says
5
Home Depot says 56M credit, debit cards compromised Home Depot says 56M credit, debit cards compromised
Trending News
Video
x
Feedback