Annals of Bad Ideas: Subsidizing Gas Stations
Your elected officials at work: D.C. Council member Carol Schwartz has proposed the "The Retail Service Station Incentive Act of 2006," which would grant entrepreneurs some very lovely tax breaks if they would kindly open a gas station in the District of Columbia.
What? Government concocting a new and exciting way to subsidize the oil industry? Say it ain't so.
But it is: Not only Schwartz, but also council chairman Linda Cropp and council members Sharon Ambrose, Marion Barry, Kwame Brown, Vincent Gray, Kathy Patterson and David Catania--a majority of the council--are listed as supporters of the bill.
Why in heaven's name would an elected official offer to exempt the owner of a new gas station from the sales taxes due on the purchase of equipment and supplies used in the construction of a service station? And why would the city propose to add on a 7-year exemption from property taxes and license fees for a new station owner?
Well, there is a reason: The number of gas stations in Washington has been declining for some time, as development pressure makes land much more valuable for people who want to build housing or retail establishments rather than gas stations. Since 2002, according to AAA stats cited by Schwartz, the number of gas stations in the city has dropped by 35 percent, to 88 facilities.
But so what? It's not as if it's hard to find gasoline in the city, and certainly not in the surrounding suburbs. The District is nowhere near the situation that, for example, Manhattan finds itself in, where property values have shot up so high that there are virtually no gas stations left at all. (And even there, this does not exactly cause a hardship--there are plenty of stations in all surrounding areas.)
Schwartz maintains that the paucity of gas stations hurts the city financially: Fewer stations means the District collects less in the way of gas taxes, and that prevents the District from getting its full share of federal Highway Trust Fund dollars, because the District doesn't have the dollars for the required local match.
But is granting new tax breaks the best way to raise taxes? And wouldn't the denser and more valuable housing, retail or office development that takes the place of gas stations produce far more in the way of tax revenues for the District?
It's true that gas station owners are not the big bad ogres that the oil companies are taken for in a time of $3 gas. Station owners hardly share at all in the massive profits raked in by the oil companies. In fact, many gas station owners struggle to match even the flimsy profit margins that are more commonly associated with, say, supermarkets.
But a city is a place that thrives on dense development, and gas stations don't fit in a successful, vibrant city, certainly not in the downtown areas, and not in any great numbers in the neighborhoods. The council should devote its energies to expanding the tax base through residential and business development that encourage transit use and walking--not more cars.
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