A Ballot Committee of Citizens for Limited Taxation

Barbara Anderson is executive director of Citizens for Limited Taxation. Her syndicated columns appear weekly in the Salem Evening News and the Lowell Sun; bi-weekly in the Tinytown Gazette; and occasionally in other newspapers.

February, 2000

Unlike taxes,
after oil prices go up, they usually come back down

By Barbara Anderson

One good thing about the latest so-called crises is that one of them may cancel out an unacceptable solution to the other. With the cost of gasoline going up because of high oil prices, there might be public resistance to raising the gas tax to pay for the Big Dig cost overruns.

Since I heat a small house with gas and drive a fuel-efficient Honda Civic, I didn't notice that we are having another oil crisis. Actually, I tuned out on the subject of oil crises altogether years ago when I watched a TV reporter do an interview with an Avon Lady, who stated her opinion that the shortage was deliberately caused by oil tankers anchored in Boston Harbor until prices went up. The reporter nodded as if he thought he had just learned something.

Nothing against Avon Ladies, of course, but as a woman myself I have noticed that men seem to know more about fuel stuff than we do. So I asked my partner Chip Ford about the present shortages and he explained the facts of life to me: "When prices are low, producers produce less; then when prices rise, they will produce more because suddenly it's profitable again, and the oil crisis will be over, just like always."

Supply and demand; I've heard of that. Gee, it applies to oil as well as housing, airfares, and beanie babies!

This is not to say that it won't be painful for people who have to pay the unexpected higher cost of home heating oil, a large part of an oil-heated household budget. Now they know how the Commonwealth of Massachusetts feels as the cost of the Big Dig accelerates.

No, actually they don't. None of us can imagine how it feels to deal with a budget shortfall by making other people pay for it. In fact, we are the people that the commonwealth is expecting to pay its construction cost overruns, on top of our higher heating bills and gasoline costs. We are also the people still paying for the last state crisis, with the "temporary" income tax rate increase of 1989. Much of that hike covered the overdue Medicaid bills that the state neglected to pay with our earlier tax payments while the Dukakis administration was faking balanced budgets for its presidential campaign.

And we're the same people who won't be getting back any of the $8.3 billion tobacco company reimbursement for those twice-paid Medicaid bills. Some of it is going to assist assaults on private property rights, like the full-page ad in a Marblehead weekly thanking the Board of Health for banning smoking in all Marblehead restaurants and bars. Beacon Hill plans to keep much of the rest of the reimbursement in a slush fund for future state spending.

Slush funds are very big on Beacon Hill these days. There is a $1.6 billion "rainy day fund" in case the economy slows down and the government wants to keep growing fast. There is a capital reserve fund so there'll always be money for taxpayer-subsidized convention centers, modern art galleries and sports stadiums. There's even a "welfare reform fund" in case welfare reform doesn't work and the state wants to put people back on the dole.

Despite a total of twelve billion dollars in slush funds and tobacco settlements, Massachusetts politicians can't think of any way to deal with the Big Dig shortfall except by raising our drivers' fees and, sooner or later, highway tolls. Incredibly, some of them even want to increase the gasoline tax again.

Meanwhile, some of the same legislators who are decrying home heating oil costs are unwilling to help their constituents pay them by cutting the income tax rate or sharing the tobacco company reimbursement. In fact, the Massachusetts House just rejected a Republican proposal to temporarily release truckers from the diesel fuel tax while the prices are so high.

The gasoline prices and taxes hurt not only all drivers but all consumers, as much of the higher trucking costs are passed on to us in the price of the goods delivered.

We may not like the big oil companies who didn't plan properly for this year's oil needs, but at least when the cost of oil drops they will lower the price again, and consumers will pay less. If the state government were in charge of oil, the price would just keep going up forever. That's the Beacon Hill law of supply and demand: whatever the legislature demands, we taxpayers supply, until we finally stand up and say, "enough."

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