Mayor Bloomberg tells us what he really thinks of this proposal:
Michael Bloomberg said giving drivers a break from the gas tax is “the dumbest thing I’ve heard in an awful long time.” I asked him about it right after he delivered his executive budget at City Hall just now. He said, “It’s the dumbest thing I’ve heard in an awful long time from an economic point of view. I don’t understand why you think there’s any merit to it whatsoever. We’re trying to discourage people from driving and we’re trying to end our energy dependence. We don’t do that—oh, and incidentally, we’re trying to have more money to build infrastructure. All three of those things go fly in the face of giving everybody $30 a year. The $30 bucks is not going to change anybody’s lifestyle. The billions of dollars that we would otherwise have in tax revenues can make a big difference as to what kind of a world we leave our children.” Bloomberg praised officials who opposed the “summer break on gasoline taxes which would help Chavez, Qaddafi and other people like that. I don’t know why anybody would want to do it.” He went on to say critics like Assembly Speaker Sheldon Silver were right. “And,” he added, “[Barack] Obama was right on this one, and that [John] McCain and [Hillary] Clinton were wrong. The last thing we need to do is encourage people to drive more and to take away the monies we need for infrastructure in this country.”
It turns out that certain local NY politicians want to suspend the local taxes on gasoline too. Let’s here from one of these panderers – just to be fair and balanced:
Joe Bruno’s spokesman, Mark Hansen, responds: “The vast majority of New Yorkers, especially upstate, must rely on their cars to get to work and school and do not have any mass transit. The rising price of gas is costing them $10 to $20 more every time they fill up their tanks. The Senate, like John McCain and Hillary Clinton, support cutting gas taxes because it is the right thing to do to give New Yorkers relief.”
With gasoline prices now approaching $4 per gallon and putting a strain on New York’s hardworking families and small businesses, Senator Bruno announced the Senate will act on legislation to provide much needed relief at the gas pump by suspending New York State’s gasoline taxes during the summer travel season. The bill will eliminate the New York State taxes on gasoline from Memorial Day weekend through Labor Day. If the federal, State and local governments all temporarily suspended their taxes, New Yorkers would save 65 cents per gallon at the pump.If the State enacts this tax relief plan, New Yorkers would save approximately 32 cents per gallon in state gasoline taxes under the plan, including 16 cents from the State’s Petroleum Business Tax, 8 cents from the State sales tax, and 8 cents from the State’s Motor Fuel Excise Tax … Under the Senate plan, the average price of a gallon of diesel fuel would be reduced from $4.58 to $3.93.
Bruno is assuming 100% of the incidence of fuel taxes accrues to consumers, but many economics argue that most of the incidence accrues to suppliers. I look forward to Mayor Bloomberg pointing out how dumb Senator Bruno is with respect to this issue.
Update: Alison Fitzgerald of Bloomberg.com writes:
Economists have a different take: They say the oil companies may end up the biggest beneficiaries, while the aid to families wouldn’t be enough to buy a $35 backpack. The trouble with the plan, they say, is that oil prices are rising because of low supplies, and companies will continue to charge the average $3.60 a gallon and just pocket the money that would have gone to federal taxes. “That’s $10 billion, and it’s going into the pockets of oil refiners,” said Leonard Burman of the Tax Policy Center in Washington. “The last time I checked, they didn’t need it.” Supplies are “being cleared at the current price,” said Donald Parsons, an economics professor at George Washington University in Washington. “If you take away the tax, you’ll have the same number of consumers willing to buy the gas at the same total price.”