Merits of repealing the 1993 Gasoline Tax

The Omnibus Budget Reconciliation Act of 1993, which imposed the largest single tax increase in recent decades$268 billion over five yearsalso included a $4.8 billion annual gasoline tax increase. The 1993 gasoline tax increase amounts to about 4.3 cents per gallon of gasoline. Revenues from this additional excise tax go directly into the General Fund of the Treasury as part of a deficit reduction program.

This excise tax is in addition to a variety of other federal and state taxes on oil and transportation fuels. Over the last 10 years, federal gasoline taxes have more than doubled, from 9 cents per gallon to about 18.3 cents per gallon (including the 4.3 cent excise tax in 1993). States levy their own additional taxes on gasoline. Depending on the state, these taxes have also generally doubled. In some high tax states, such as California, consumers pay 47.4 cents in taxes on every gallon of gasoline.

Most of these other fuel taxes are used for specific programs, usually to fund highway improvement projects. The first deviation from this practice occurred in 1990 when the federal government imposed a 2.5 cent per gallon excise tax o

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ing their raw materials and consumer goodsall of these businesses will benefit. Even though the benefit will go to businesses large and small, the savings will have a far greater impact on small businesses, which allocate a greater proportion of their resources for the costs of transportation. Perhaps the greatest reward of all from the repeal of the 1993 gasoline tax will go to consumers, especially middle and lowerincome consumers. According to the Congressional Joint Economic Committee, the lowest income families in the United States pay four times as much of their disposable income on gasoline than the highest 20 percent of income earners. The 1993 gasoline tax amounts to roughly $422 per year in taxes for the average family. This is a big tax burden on middleincome and lowincome families. Furthermore, the tax is costing the American economy jobs. According to the Tax Foundation, the 1993 gasoline tax is responsible for the loss of 69,000 nationwide. Once again, in some regions of the nation, the cost is even higher. In California alone, the Tax Foundation estimates that the 1993 tax cost 8,000 jobs in that state (Archer, 1995, pp. 2025). Political Strategy Small business interests can play a key role in encouragin
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