Haley’s Gas Tax Repeal Is A Misguided Idea

The late columnist Robert Novak once said “…God put the Republicans on Earth to cut taxes. If they don’t cut taxes, they have no overriding rationale for existence.” And Republicans have generally followed Novak’s words, backing tax cuts even as they failed to reduce their appetites for more spending.

Today’s field of Republican presidential candidates is paying more lip service to the idea of spending restraint – at least unless one of them is elected. And on the idea of tax cuts, well, those are on the menu, too. Among the ideas floating around: former South Carolina Gov. Nikki Haley’s proposal to end the federal gasoline tax.

It’s an idea intended to generate friendly headlines and huzzahs on the right. And it will. But is ending this tax – which has stood at 18.4 cents a gallon for unleaded and 24 cents for diesel since 1993 – good policy?

The folks at the Tax Foundation say “no.” Ending the federal gas tax – and replacing it with…nothing…will only force the government to scrouge the money to build and maintain transportation infrastructure from somewhere else:

Repealing the gas tax and not replacing it with some other form of user fee would mean relying even more on general federal revenue, and thus relatively destructive taxes, to fund infrastructure. With massive deficits expected over the next decade, eliminating the gas tax would risk putting even more pressure on income taxes to close the gap, to the detriment of the economy.

The Tax Foundation notes that then-Gov. Haley had a solution for South Carolina drivers:

In 2015, she proposed a tax swap that involved increasing the state gas tax by 10 cents a gallon and reducing the top individual income tax rate from 7 percent to 5 percent. Such a proposal at the federal level would be commendable.

It would be – and leading anti-tax advocate Grover Norquist understood that what Haley was proposing back in 2015 would end up being a net gain for taxpayers:

“Some legislators are proposing to raise the gas tax and ignore the proposal to cut the income tax,” Norquist wrote in a 2015 letter to South Carolina lawmakers urging them to support Haley’s proposed income tax cut. In that letter to legislators in Columbia, Norquist stressed that “it’s important that a gas tax increase be contingent upon the passage of an income tax cut. Otherwise, lawmakers will simply be voting for higher taxes.”

Not surprisingly, lawmakers in the GOP-controlled Legislature weren’t interested in the idea. They raised the gas tax after Haley left Columbia to become U.N. Ambassador.

Haley has taken hits from others in the GOP field for supposedly hiking the gas tax during her tenure. While this is demonstrably untrue, it does help explain why she advocates a complete end to the federal gas tax.

It may be a worthwhile political tactic. But it’s bad policy. Gov. Haley would understand why.

The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.