House Votes to Repeal 4.3-Cent Gas Tax Hike

WASHINGTON — In an election year move for a quick and popular tax cut, the House voted Tuesday to roll back the federal gasoline tax by 4.3 cents a gallon in hopes of pulling down fuel costs in time for the summer driving season.

The vote was 301 to 108 to repeal the tax, a key part of a 1993 law that was President Clinton’s major deficit-reduction initiative.

Republicans characterized the vote as the first step in an effort to scale back Clinton-era tax increases and to frame the differences between Clinton and GOP presidential candidate Bob Dole.

“We see this as an effort to support President Dole in his first salvo on taxes,” said House Majority Leader Dick Armey (R-Texas).

Democratic critics said that the bill was a shameless political ploy and that it did not do enough to ensure that consumers benefit from the tax reduction.

“We’re only here because Mr. Dole is running for president and he’s way behind in the polls,” said Rep. Sam M. Gibbons (D-Fla.). “He’s got to do something to jump-start his campaign and he’s chosen this. It’s pandering at its worst.”

A Democratic effort to require oil companies to cut the price of gasoline at the pump was blocked on a 225-183 party-line vote. But in a sign of election year squeamishness about voting against tax cuts, 92 Democrats--almost half the party’s caucus--voted for the tax rollback. All but 14 Republicans voted for it.

However, the tax cut, which would be effective only until the end of the year, cannot become law until a logjam is broken in the Senate. Democrats have refused to let the issue come to a vote in that chamber until Republicans promise them a vote on increasing the minimum wage.

Prospects for ending that stalemate brightened somewhat this week as Republican leaders in the House, bowing to heavy pressure from Democrats and moderate Republicans, scheduled a vote today on a minimum wage hike. It is expected to be linked to a package of tax breaks for small businesses and a minor labor bill. Senate Minority Leader Tom Daschle (D-S.D.) said that the emerging legislation appears promising and that its passage could help clear the way for breaking the logjam in the Senate.

“There are some signs of movement here,” said Daschle.

But Senate Majority Whip Trent Lott (R-Miss.) said that the gas tax bill probably would not come up until early June, after the Senate returns from a weeklong Memorial Day recess.

Clinton has signaled that he would sign a gas tax cut if it were accompanied by a minimum wage hike. “The two ought to go hand in hand,” White House spokesman Mike McCurry said Tuesday.

The gas tax repeal moved quickly to Congress’ front burner a few weeks ago when Dole’s endorsement became a central issue in the presidential campaign.

Dole was responding to consumer complaints about the sharp rise in gasoline prices since the beginning of 1996. According to the House Ways and Means Committee, the average national price for regular unleaded gasoline increased from $1.09 a gallon in early January to $1.28 a gallon in early May. Gas prices in California--at more than $1.50 a gallon--are among the highest in the country and one of the state’s lawmakers, Rep. Andrea Seastrand (R-Shell Beach), estimated that repeal of the 4.3-cents-per-gallon tax would save California drivers $225 million in 1996 alone.

Some opponents of the rollback argued that the price of gasoline soon would be dropping anyway because of a United Nations agreement announced Monday that would allow Iraq to sell oil to pay for food and other humanitarian supplies. As a result of that agreement, the federal Energy Information Administration estimated that gas prices could drop 3 cents or more, even if the gas tax is not rolled back.

But Armey said that the agreement with Iraq should not affect the need to drop what he called an “inequitable, inappropriately leveled tax.”

Republicans--who proudly noted that no GOP lawmaker voted for the 1993 budget law that raised the gas tax--used the debate to portray Clinton and his fellow Democrats as unreconstructed tax-and-spend liberals. “There isn’t a tax that they don’t love,” said House Majority Whip Tom DeLay (R-Texas).

Democrats argued that the oil companies would not drop prices but would take advantage of the tax rollback to reap bigger profits. But Republicans cited public pledges by Chevron and other major oil companies that they would pass along the savings.

“Market forces will dictate that consumers will benefit,” said Rep. David Dreier (R-San Dimas).

The legislation approved by the House would roll back the gas tax only until Jan. 1. That would mean that it would drop to 14 cents a gallon until the end of the year, then jump back up to 18.3 cents unless Congress took further action. However, Armey said, he expects Congress to enact legislation later this year that would make the repeal permanent.

The Congressional Budget Office estimated that the bill would reduce revenue by $1.7 billion this year. To make up for lost revenue, the bill would cut the Energy Department’s budget and auction off more radio frequencies for wireless communications and other new uses.

Those provisions put the House bill at odds with Dole’s gas tax repeal proposal, which calls for offsetting some of the cost of the bill with a controversial proposal to require banks to make bigger deposit insurance payments.