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'Orwellian politspeak' on gas tax hike

About Colin McNickle
Picture Colin McNickle 412-320-7836
Director of Editorial Pages
Pittsburgh Tribune-Review

Colin McNickle is the Trib's editorial page editor.

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By Colin McNickle

Published: Saturday, Jan. 19, 2013, 9:00 p.m.

They must be reading a lot of George Orwell in Gov. Tom Corbett's inner circle these days.

The Associated Press first reported that the “centerpiece” of the governor's forthcoming transportation funding plan — to repair infrastructure and give mass transit a more “dedicated” funding stream — involves raising taxes on the wholesale price of a gallon of gasoline.

Or as the AP distilled it — “nearly $2 billion a year in new taxes on gas stations.”

Such counterintuitive economic “progress” would be accomplished by eliminating the cap on the Oil Company Franchise Tax, now applied to the first $1.25 of the wholesale price. Eliminating the cap, and applying the tax to the full wholesale price, would raise about $1.9 billion annually, state officials told the AP.

And even though it walks, quacks and does something odoriferous that shares a name with a dice game, just don't offend political sensibilities and call it a “tax hike.”

Since, supposedly, the increased taxes won't be paid directly by consumers — as in the end-users who fill up their vehicles — “How is (Corbett) raising taxes?” spokesman Kevin Harley asked the AP.

“I'm curious how he's raising taxes,” Mr. Harley added.

As George F. Will is wont to say in moments like these: “Well.”

Or as Jake Haulk, president of the Allegheny Institute for Public Policy, put it, “Orwellian politspeak.”

Considering the thigh bone's connected to the backbone, the backbone's connected to the neck bone and the neck bone's connected to the head bone (though that being questionable in the latter case), taxpayers should find Harley's statement on behalf of the Corbett administration nothing short of “How stupid do you think we are?”

If wholesalers are going to pay nearly 29 cents more per gallon — which is the estimated effect of a full and immediate removal of the Oil Company Franchise Tax cap — does the administration sanely believe that wholesalers won't pass any, some or all of that cost on to the gasoline stations they supply, or that gas stations, with quite slim profit margins — it's under 2 percent (and for total sales, not merely gasoline sales) for private stations — are going to swallow the increase?

Really?

“Margins for gas stations and wholesalers are thin,” reiterates Dr. Haulk, a Ph.D. economist. “Thus any increase in taxes on gasoline will cut into profits unless they can pass the tax hike along to consumers.

“As we have learned in recent years, the demand for gasoline is very inelastic — that is to say increases absorbed primarily by consumers do not lower the amount purchased significantly. And therefore price jumps caused by tax hikes will be absorbed primarily by consumers.”

That's Economics 101, Haulk says. And “since the public will be well aware of the tax hike, the retailers and wholesalers can blame the politicians for higher prices.”

And not only for gasoline but for every consumer product in the supply chain delivered by a gasoline-powered vehicle. Gee, what will those new pizza-delivery surcharges be?

How is Tom Corbett raising taxes? That's how Tom Corbett is raising taxes, Kevin Harley.

Colin McNickle is Trib Total Media's director of editorial pages (412-320-7836 or cmcnickle@tribweb.com).

 

 
 


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