Time For A Gas Tax Increase Is Now, But Delay Imposition 'Til Recession Eases
By John O'Dell May 28, 2009
We've suggested several times now that increasing the national fuel tax would be a more efficient way for Uncle Sam to prod people into smaller, more fuel-efficient cars than the politically preferred method of using fuel economy standards to force automakers to build 'em with no incentive for us to buy 'em.
Based on present gasoline use, a $1 per gallon tax increase would raise $100 billion to $150 billion a year for the federal government and still keep U.S. gasoline prices lower than in most other developed nations.
The suggestion has raised objections from critics who say the middle of a deep recession is no time to be raising taxes.
We could kick ourselves for not thinking of this solution on our own, but why not delay imposition of the tax but announce it now?
The idea was raised a few days ago by Michael Levine, a researcher and senior lecturer at New York University School of Law, and Mark Roe, a Harvard Law School professor, in an article published in The Financial Times and reprinted in the Harvard Law School newsletter.
They suggest that if Congress and the administration were to show some political spine and enact a gas tax hike to be phased in over several years after a delayed start, the knowledge that it was coming would begin pushing consumers toward the kinds of green vehicles the government wants to promote while the delay would help get us through the present economic downturn.
Roe and Levine aren't naifs, they acknowledge that a stupendous amount of politicking and deal-making would be required to get a gas tax hike passed, and that the burden likely would fall on the individual consumer rather than fuel-intensive industries such as airlines, agriculture and private taxi and bus operations.
But business doesn't really pay taxes anyhow - businesses' customers pay them through increased prices. Exempting their fuel from the tax increase, or setting up a two-tiered system to give such industries a break, wouldn't really be creating any extra pain for the rest of us and could ease the path to approval.
The principal reason no one in government is talking about a gas tax increase - except to say that it's a non-starter - is that politicians are afraid of the potential backlash. President Obama's energy secretary, Stephen Chu, said as much in a recent interview.
But those same politicians tell us that our continued use of massive amounts of mostly imported oil and our continued burning of billions of gallons of gasoline in our personal vehicles is poisoning the atmosphere and threatening national security.
It is a time of crisis. Political bravery, not timidity, is called for. Sometimes government's role is to lead, not to follow.
A gas tax increase, as Roe and Levine argue, ought to be part of national policy. Now.
John O'Dell, Senior Editor
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Click here to comment on this entry.I am all for going green, and people buying more economical and environmentally friendly vehicles. However, more taxation is not the answer. Big government should not dictate what vehicles we buy. This country is based on Capitalism, supply and demand should dictate what type of vehicle is offered for sale.
How about we spend money when we have money? It's not the time to push political agendas.
sdslawny:
Right now, supply and demand isn't happening. The government forces automakers to make efficient vehicles, but no one buys them. The gas tax would cause demand to shift to different vehicles, and the automakers would be more than happy to supply them. It creates a significantly more predictable market, which is a huge benefit for everyone. If you're concerned about taxes being too high, offset the gas tax with a reduction in income tax rates.
One more thing... With the gas tax plan, the consumer has ultimate control over how much they pay in taxes. Want to pay less taxes, use less gas. That's a freedom we don't have now.
In theory I see where you are coming from, but logically speaking there is no way our income tax rates are going to go down. Fees for license registration, renewals and emmission testing has continued to rise with no relief from other forms of taxation.
We may not have the freedom to control how much tax we pay, but we still have the freedom to decide how much we drive. Gas prices go up, we drive less. I don't see how having a larger gas tax will change that any.
One other concern I have. How can we be sure the money raised from an increase in tax on gas would actually go towards advancing fuel efficient technology? Lets be honest there is no accountability in government.
I'd rather they put a large tax on inefficient vehicles at the time of sale, than tax gas every time it's used. It would still shift demand towards more efficient vehicles, without the hardship on our economy.
Depending on where you live, there are people in rural areas who will need to use quite a bit of gas and can do nothing about it. And they'll be hit hard by a high gas tax.
So my vote would be to add 1000 bucks at 25mpg, another 2000 at 20mpg, another 3000 at 15mpg combined. Would you still need an F150 if it meant another 6000 in taxes at the time of sale?
bepperb,
What you propose is the same thing you criticized. You wrote:
"there are people in rural areas who will need to use quite a bit of gas and can do nothing about it. And they'll be hit hard by a high gas tax"
What about people in rural areas who need an F-150 and can't do anything about it? Wouldn't that 6000 place an unfair burden on them? At least with the gas tax, you pay less as a vehicle's efficiency improves.
I guess my question is, why does government have the right to tell me what to drive? If I want to drive my F-150 why should I be taxed more than someone who wants to drive a Prius? Government should not control the free market. That is why I am totally against the Gov (Ie Taxpayer) owning a major stake in GM, which we are about to do.
If people want to be environmentally conscious and drive a small fuel efficient vehicle that is great and I fully support that. If someone wants to drive a huge truck, no matter if they need it or not, I am all for that as well.
What if the government decided to heavily tax the fast food industry because they dramatically increase the number of obese people? In the same vein what if they give tax breaks to people that eat at healthy resturants? Sure, it's the "right thing" for people to eat healthy, but does that mean government should dictate what and where we eat?
This is a free country right?
sdslawny, the short answer is: no.
I agree w/ Sdslawny. Allow the free market to determine what types of vehicles auto manufactures offer. You will never find me behind the wheel of a Prius. Ever!
If our government was truly interested in reducing our dependence on foreign oil, we would drill (more) in this country.
I think the point is that people will have to make sacrifices to acheive a common goal. Whether this is increased gas tax, a mileage based tax, a guzzler tax, sales tax or whatever, for the common goal of reducing the effects of something that could harm the entire world, I think it's ok to ease the market in a certain direction. It's not like this has never happened before. Think about all the legislation against smoking.
That said, I don't agree with it. I don't believe there is enough evidence to support that mankind is the primary cause of any "climate change". Environmentalists will be quick to pull out graphs of global temperatures over the last half billion years and show that a recent upswing appears to correlate with industrialization. But I would point out that the temperature has been many degrees HOTTER than now, and those warmer temperatures were accompanied by increased biomass. That means increased temperatures are actually a good thing, contrary to all the doomsayers.
Help the environment. Buy a Hummer. No, not an H2. A real Hummer.
You're right lostandfound08. Everyone who doesn't live in a city also drives an F150, and needs it.
Just like everyone in the city drives those Smart cars, because that's all they need.
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