Why not a higher gas tax?
Yesterday, we asked where government spending for plug-in hybrid conversions is at? In the discussion that followed, some readers said they preferred to see higher gas taxes instead of a move by the government to take sides and try to figuring out which technology would best help us move off of gasoline. We've heard support for a higher gas tax from executives at Ford and AutoNation, and the Wall Street Journal says bumping up the taxes are one way to save GM. Exactly how to implement this is tricky. One idea was to raise fuel taxes by 25 cents every year in order to make it clear that the increases are coming, and a gradual plan makes a lot of sense. Of course, the political will required to implement such an increase is almost too amazing to expect out of anyone looking for re-election, but we're not running for office here. We're trying to find the best way to reduce the amount of gasoline used, and it seems like the gas tax is the leading option. But someone's got to be against it. I get that it'll hurt people's pocketbooks, but the economic argument might not be as valid a reason as it appears at first blush. So tell me, what good reasons are there to not raise the gas tax?
Photo by mandj98. Licensed under Creative Commons license 2.0.

Reader Comments (Page 1 of 6)
km 8:03PM (7/15/2009)
Don't need it.
What'll make people drive smarter vehicles are incentives and an actual infrastructure to support alternative power plants. I'd drive a NG powered car already but can't be bothered to hunt for the fuel as it is hard to come by where I am. I'd switch to even better MPG car if I qualified for cash for clunkers.
US and most developed countries have not been the culprits behind the pinch in energy, if I remember correctly I read somewhere that in 2007 developing nations for the first time surpassed consumption of oil of developed nations.
Meanwhile we are already in the midst of a tremendous demand destruction starting with the $147/barrel fiasco.
In my industry there is wholesale rampant efforts to conserve energy and push towards alternatives. I mean a HUGE push, which already had an impact over the course of 2008.
Incentives will make it happen even faster.
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polo 12:30AM (7/16/2009)
Of course we don't need a gas tax, and the idea is worthless since it will NEVER have political support from Democrats (a gas tax is the most regressive form of taxation) or Republicans (who hate taxes and "green" tech equally). But these gas tax threads are an easy way to boost comments so we get one every other week...
And lets be real. 25cents a year won't do ANYTHING until the fourth year when you artificially push prices past $4 or $5..after which the political pressure to eliminate it would be IMMENSE (imagine if last year we could lower the price of gas $1 with a simple piece of legislation). If there's even a slight hint the gas tax caused job losses or hurt the economy *poof* instant campaign issue with both sides arguing who's going to get rid of it faster. Its not a sustainable or practical idea.
Bring on the $15K EV and $7K hybrid credits and you'll get the industry moving. There also isn't any other viable gasoline "alternative" except electrics. If and when we get hydrogen cars down to a 10th of their current prices, we can start debating whether to "pick and choose" but right now their is only one.
dhofmann 2:10AM (7/16/2009)
"a gas tax is the most regressive form of taxation"
Wrong. A sales tax is, when used for roads. People too poor to own cars still have to pay sales taxes, on top of the cost of shipping goods to stores.
polo 2:27AM (7/16/2009)
"Wrong. A sales tax is, when used for roads. People too poor to own cars still have to pay sales taxes, on top of the cost of shipping goods to stores."
Sales taxes aren't used for roads, and nobody suggested that. A gas tax is still the most regressive form of taxation.. A gas tax would put inflationary pressures on everything from food, to goods, to services in every sector of the economy, which people too poor to drive (or even use public transportation) would still have to pay, while those who do drive would get hit twice with a higher gas bill and a higher cost of living as they pay more for food, goods, services.
Redeemed 9:23AM (7/16/2009)
"Republicans (who hate taxes and "green" tech equally). "
Rebublicans don't hate "green" technology. Stop watching so much MSNBC.
Joce03 12:18PM (7/16/2009)
I disagree. I think we do need it. The only time that sales of large vehicles goes down is when gas is expensive (as it was last summer). Combine that with incentives to purchase vehicles such as PHEVs and EVs (paid for by the tax) and I believe we will see a change in what is being driven on the roads.
History shows that they only to stop people from doing something is to tax it. So, if you want people to use less gasoline, tax the gasoline. If you want CO2 emissions to go down, put a revenue-neutral carbon tax in place. It works... just ask most of Europe.
polo 4:05PM (7/16/2009)
"I disagree. I think we do need it. The only time that sales of large vehicles goes down is when gas is expensive (as it was last summer). Combine that with incentives to purchase vehicles such as PHEVs and EVs (paid for by the tax) and I believe we will see a change in what is being driven on the roads."
Last summer.....you mean last summer when we hit record inflation and foreclosures? When the automakers were seeing sales declines of around 40%? When monthly job losses started to double and triple? Why don't you gas taxers ever follow through and think about the consequences of your tax. Is it worth the risk of inflation, job losses, foreclosures, debt deliquencies, and the regresive impact on the poor...just to sell a couple more hybrids? Especially when you sell those hybrids, and more, faster, by offering high rebates?? We could easily double the number of hybrids and EVs slated for production just by doubling the EV credit and offering similar incentives for hybrids. That would guarantee both sales and production, with no adverse risk to our economy. It is also a viable solution, unlike your gas tax which wont happen, period.
Jim 5:57PM (7/16/2009)
Sales tax can be progressive assuming food and rent are not taxed. Sales tax is dependent on disposible income. Who do you think has more disposible income - the rich or the poor? A gas tax is regressive if you decide you want to drive a truck while making less than $30K/yr. The most regressive tax is Social Security. With a cap at $97,000, the poor will always have to pay while those who are more wealthy stop paying.
Getting back on topic, a gas tax is a good idea. The whole point is to encourage use of more fuel efficient cars and to use fuel more efficiently. I have been doing this before gas hit $4 and being green was a trend. You can always lower the income tax to offset the effects.
dhofmann 12:09AM (7/17/2009)
"Sales taxes aren't used for roads"
Where do you live? It must not be Arizona, which has the Proposition 400 half-cent sales tax used for roads, or San Diego, which has the TransNet half-cent sales tax for the same purpose. In fact, Texas discovered that not one road in the state pays for itself in gas taxes and fees, and that to completely pay for the 15 miles of SH 99 from I-10 to US 290 in Houston in gas taxes would be $2.22 per gallon. http://www.worldchanging.com/archives/008264.html
"A gas tax would put inflationary pressures on everything from food, to goods, to services in every sector of the economy, which people too poor to drive (or even use public transportation) would still have to pay, while those who do drive would get hit twice with a higher gas bill and a higher cost of living as they pay more for food, goods, services."
Wrong again. The prices of goods would rise due to the gas tax increase, but the sales tax would fall because it would no longer need to pay for the roads. At first glance it would seem like they would rise and fall by equal amounts creating a zero-sum result, but faced with increased shipping costs, shipping companies would find cheaper ways to transport their goods around, with the end result that the prices of goods won't rise as much as taxes fall.
novanglus 2:32AM (7/23/2009)
The answer is quite simply; basic economics. What you are attempting to do is called "command economics." And it rarely, if ever, works. If you have the government raise taxes on a product, they will spend said tax revenue. When the "change" in the market that was desired is achieved, tax revenue will decline. The market's desire for efficiency will find a way around a punitive tax, simply. So, when that tax revenue falls, and you are using less or no oil, what is left? The need for more taxes. So, you tax oil at a high rate. People move to EVs. Tax revenue from oil declines to the point that roads can't be properly maintained. They start taxing using GPS based mileage meters. Now, the tax you once avoided by buying a fuel efficient vehicle is back in your wallet. So, people start re-urbanizing to reduce their travel. Tax revenue from GPS based taxation declines to where the infrastructure cannot be properly maintained, an infrastructure that is now bigger than needed because longer distance travel has been reduced. So how do they fund that now? Property taxes? Sales taxes? You give government the power to tax and spend more money and you will regret it.
A very wise Supreme Court Justice once wrote; the power to tax involves the power to destroy. Tread carefully.
paul 8:04PM (7/15/2009)
It will never happen. Political suicide.
Why anyone supports raising taxes when we all know the Govt. is wasting billions and billions and is completely inept in everything the do is beyond me. I can't believe how much faith Liberals put in the Govt.
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win39 8:45PM (7/15/2009)
The Republicans always say that the government doesn't work. Then they get into office and prove it. I don't think political potshots was the goal here.
I think a gas tax would be political suicide too, for the Democrats. If the party out of power rose to the occasion, however, and proposed a tax as solution to this mess framing it as a national security issue it would be seen as a revolutionary act of statesmanship on a level with Nixon going to China. The Democrats and the President would go along, and Republicans would get their first approval boost in a long time. It might even have the added bonus of dethroning Rush as the defacto head of the party. It would work, but there is not much intelligence going on there right now.
coyo t 9:31PM (7/15/2009)
A couple things:
The gas that you "conservatives" dislike conserving is heavily subsidized (something you like government doing apparently) and has been for a very long time. By they way where is the conservation in your groups think tank?
Secondly our Government is simply something we choose to do together, it is us. Democratic, unlike private corporate industries which are at best fascist. Why you "conservatives" put so much faith into something that has such a horrid track record is beyond me (wallstreet, exxon, philip morris, monsonto, etc.) I guess you simply prefer government that is privatized.
I could go on, reply and I will if you want.
coyo t 10:03PM (7/15/2009)
"Govt. is wasting billions and billions..." Paul they are bailing out failed private industry (you know, the folks you seem to prefer governing). Funny enough the reason they failed is that your party's past administrations removed regulation and oversight (our Government).
Your logic is so damn odd it is sad.
Daryl Cobranchi 8:24PM (7/15/2009)
Because doing so would be highly regressive. The poor aren't going to be able to afford hybrids or clean diesels, so they'll be driving older gasoline engined vehicles that get poor mileage and paying for the privilege with higher gas taxes.
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win39 9:00PM (7/15/2009)
I agree with you. The ideal would be a system that would not hit the less fortunate up front, but after the fact might work. We used to deduct sales tax and it was an easy process. A calculation could be added to your income tax that would give a deduction or credit based on income and miles driven. At least for a little while until the gas guzzlers were phased out. The gas tax could also be used to further fund the buying up of the old clunkers.
The tax could have a start date based upon economic indicators of recovery and could be started gradually, but rapidly escalating so that people have an incentive to move to more fuel efficient or alternative vehicles.
falbhan 9:12PM (7/15/2009)
Wouldn't it be nice if we paid the true cost of gasoline instead of the government subsidized price? If we can't "afford" to tax gasoline at a realistic level now then we should probably pull the military out of the middle east as we can't afford to keep up the spending there.
Had the US started phasing in $10 gasoline 10 or 20 years ago it's unlikely that they'd be bailing out the US auto industry right now.
Why is it that the poor can't ride public transit, which is subsidized?
It seems as unlikely that the politicians will institute a real gas tax as that an incentive system will produce the best solution to the problem that fossil fuels are, or does everyone agree that ethanol is our savior?
ValkRaider 10:28PM (7/15/2009)
First a disclaimer: I am an active transit rider, supporter, and activist.
"Why is it that the poor can't ride public transit, which is subsidized?"
1. Most of the United States is inaccessible by public transit. Even most large cities have no transit or very poor transit. There are maybe 5 or 6 cities in the United States where it is actually feasible to live without a car (for anyone other than college students). Everyone else - in some way or fashion - is forced into a car.
2. Even in cities where there is good public transit, the public transit tends to serve the poor with hugely varying success rates. Transit is nearly impossible for most "blue collar" jobs because they tend to be located in areas not served by regular transit lines or the jobs work odd shifts when transit is not available. Transit is nearly impossible for many "domestic" type jobs as they types of wealthy areas which hire "domestics" are poorly served by transit. Transit is poorly suited for "handyman" or "yard maintenance" jobs as you can't bring all your tools with you. Transit is difficult for people with childcare issues, as the time available between the end of work shifts and the close of childcare facilities is often too short to allow for transit trips. Transit is nearly impossible for farm or ranch jobs.
polo 1:06AM (7/16/2009)
"I agree with you. The ideal would be a system that would not hit the less fortunate up front, but after the fact might work. We used to deduct sales tax and it was an easy process. A calculation could be added to your income tax that would give a deduction or credit based on income and miles driven."
A large percentage of the lower income households don't even make enough pay income tax. You're tax plan would still be highly regressive, and then there are those in the middle class who would be stuck in areas with poor or inadequate public transportation and be forced into a lower standard of living just to pay the escalating gas bills.
"Had the US started phasing in $10 gasoline 10 or 20 years ago it's unlikely that they'd be bailing out the US auto industry right now."
Even gas in Europe isn't that much. You don't even think about raising fuel prices like that without spending hundreds of billions on public mass transit (and a high speed rail line can take a decade to complete) - and you're talking about costs so high they could never be recouped with a gas tax. In Europe most of those countries are socialist so they own the service and lines and run them at low cost as a public service. Should we socialize our rail service (private industry could never afford it) and spend nearly a Trillion on it just to accommodate artificially high gas prices? You starting to see how ridiculous it sounds?
dhofmann 2:15AM (7/16/2009)
"Because doing so would be highly regressive. The poor aren't going to be able to afford hybrids or clean diesels, so they'll be driving older gasoline engined vehicles that get poor mileage and paying for the privilege with higher gas taxes."
Except for the poor who can't afford to drive at all, and yet are still paying for the roads through the sales tax and also through the prices of goods shipped to stores. At least with a gas tax, only the users pay.