Would a Gas Tax Holiday Help Your Personal Finances?

All three presidential candidates have different economic solutions. And, as the economy continues to dominate headlines (and cause worries about individual personal finances), the candidates continue to roll out economic proposals. One proposal that is getting a lot of buzz right now is the so-called gas tax holiday.

Hillary Clinton and John McCain are both saying that a gas tax holiday would help ease personal finances. After all, it would make gas cheaper. But would it, really? Consumerism Commentary points this out about the gas tax holiday:

Ignoring the fact that when a tax holiday is in practice, gas prices might simply rise to negate the savings and match what consumers are willing and able to pay, the 18.4 cent theoretical reduction in a gallon of gas will be almost invisible. With a gallon of gasoline around $3.60 for me here in New Jersey, this 5% discount doesn’t even bring the price down to its level from a few months ago.

So, in practice, a gas tax holiday doesn’t really help your personal finances. But it would help the Big Oil companies. They’d be able to make even bigger profits, since they would be able to keep gas prices at a level that Americans have so far proved they are willing to pay. Big Oil already enjoys tax subsidies and breaks from the government. Does the industry really need another way to increase its multi-billion dollar profits?

Besides, as Barack Obama points out, a gas tax holiday would decrease the amount of money that is available to pay for road improvements. And our infrastructure in the road department already has issues.

Bottom line: A gas tax holiday might grant you enough room in your personal finances to buy another gallon of milk plus a dozen eggs, but it won’t make that big of a difference.

image credit: IvoShandor