In a major economic address on April 15, Republican Presidential candidate Sen. John McCain proposed a three-month moratorium on the collection of federal motor fuels taxes. The proposed "Gas Tax Holiday" would suspend the taxes from Memorial Day through Labor Day.
In a press release, the Associated General Contractors of America (AGC) called the proposal “irresponsible and short-sighted” because the moratorium would cost the Highway Trust Fund (HTF) highway account $8.5 billion based on the Bush administration’s budget projections. The HTF already faces a shortfall.
If enacted, the proposed revenue cut would reduce federal highway funding to states by as much as 80%, causing massive cutbacks in transportation improvements nationwide and far-reaching impacts throughout the economy.
"Senator McCain's proposal will hurt consumers and is bad economic policy," said AGC's Chief Executive Officer Stephen E. Sandherr. "This proposal is not guaranteed to lower gas prices and ignores the real causes for the price increases."
This reduced investment in the HTF could have a ripple effect throughout the economy, the press release stated. For instance, the reduced investment threatens about 295,000 construction and related industry jobs, which would add to a highway construction unemployment rate that has steadily increased over the past 15 months.
The Transportation Construction Coalition (TCC), which is co-chaired by AGC, is contacting both the House and the Senate to encourage the rejection of this proposal and ones similar to it.