Division Street

George Frost writes at Salon that “Obama is wrong about the gas tax” and uses Obama’s own experience in Illinois as the reason why.

“CBS News says Obama voted for the temporary lifting of the tax three times in the state Senate,” Frost writes. “The tax holiday was finally approved during a special session in June of 2000, when Illinois motorists were furious that gas prices had just topped $2 a gallon in Chicago. The moratorium lifted the state’s 5 percent sales tax on gasoline through the end of 2000.

“Obama told constituents that gasoline prices would drop: ‘Gas retailers must post on each pump a statement that indicates that the state tax has been suspended and that this temporary elimination of the tax should be reflected in the price per gallon of gas.’

“During one state Senate floor debate, Obama joked that he wanted signs on gas pumps in his district to say, ‘Senator Obama reduced your gasoline prices.’”

Obama acknowledged he favored a gas tax holiday while an Illinois state senator when asked by Tim Russert on Meet the Press on Sunday, but said that he learned his lesson when lawmakers reviewed the result and found it wanting.

Not so, writes Frost.

“In fact, the only scientific study done on the pass-through of the tax holiday savings to Illinois consumers (and those in Indiana, as well, whose citizens enjoyed a similar holiday) found that it actually worked to a large extent.

“The study is titled $2.00 Gas! Studying the Effects of a Gas Tax Moratorium, by Joseph J. Doyle Jr. and Krislert Samphantharak. Download the PDF here. The authors concluded that ‘the suspension of the 5% sales tax led to decreases in retail prices of 3% compared to neighboring states. And when the tax was reinstated, retail prices rose by roughly 4%.’

“This suggests that the tax holiday delivered at least 60 percent of the tax savings to motorists.”