• Jul 15th 2009 at 7:44PM
  • 109
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.

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    • 1 Second Ago
      • 6 Years Ago
      Of course a gas tax would work. I think it could even manage politically if it was framed right. But just throwing it on people would be suicide. The most important part is to make sure the revenue from the tax makes it back into peoples pockets. The poor might end up spending $500 more a year on fuel, and get $500 back at the end of the year (or at the beginning?). The rich might spend $2500 a year on fueling their motor homes and speed boats, and they, too, get $500 back a year.

      The sad thing is that the *best* solution hasn't been discussed much lately. That would be a proper CARBON TAX. This would truly balance the field and favor technologies that are sustainable at all levels, not just at one specific point in the vehicles cycle. The cleanest, most sustainable technologies will work their way to the top with no specific manipulation or subsides by the government. Again, the way to make this work would be to hand some cash back to people so the poor don't suffer and those with the most consuming lifestyles (not necessarily the rich) pay the way.
        • 8 Months Ago

        Pay attention here: I don't suggest using the gas tax as a cash cow. Perhaps some of the revenue gets funneled off the top and goes into greener transportation programs. However a big chunk of it goes right back into the pockets of the people buying the gas. The difference is that everyone gets roughly the same amount of cash back. I would propose that people that don't own or drive a car could even potentially profit a little. And those who choose to continue driving 12mpg beasts (and are a main source of our environmental and energy problems) really do pay through the nose for the privilege of beating on our planet and worsening our economic crisis.

        So just to be extra, extra clear: Your average small family that chooses to drive a reasonable vehicle comes out no better and no worse. People who go above and beyond actually get a head, and those who want to do whatever-the-heck-they-want can continue to live that way, they just pay something more like the *real* costs of fossil fuels.

        Perhaps some people get rid of their car and turn to bikes/transit. Some people will continue to drive their land yachts without a care for anyone or anything in the world. But I'm guessing that most would walk into their car dealership when they're ready and say "I want a car with great MPG, it's very important to me". And that's the WHOLE FRICKIN POINT.

        Forcing the car companies to create the cars, without somehow maintaining that demand, is a recipe for further disaster.
        • 8 Months Ago
        @swede: No no no, you of everybody should know that's not the way it works.
        You put a tax on the gasoline alright but you forget about the moms--the VAT--that you put on top of the taxed gasoline price. You do realize you actually pay taxes on the taxes right?
        • 8 Months Ago
        How would a gas tax work?? We already had record high gas prices and what did that achieve exactly? Are you expecting the inflation from your higher gas prices to change oil into water? Are all the trucks and SUVs automakers STILL rely on for profits suddenly going to turn into purring Prius's? Or do you expect the increased profit margin the oil companies will get as result to cause their CEOs to have an epiphany and reveal cheap portable cold fusion generators for every car?

        • 8 Months Ago
        >I remember people running heads over tails from their large, inefficient SUV's and trucks. And then prices dropped and Americans started buying satans F150 again.

        Do you also remember the 40% monthly drops in sales that almost wiped the automakers out? Do you remember the 30-50% jump in the cost of some items due to inflation spikes, caused by these higher gas prices? Do you remember the drop in consumer spending and consumer confidence, which spurred industries to start laying off more workers due to decreased demand? Do you remember the high transportation costs and inflation leading cash strapped families to start defaulting on debts, mortgages, and credit cards....something which gained momentum as gas prices got higher. Why do you gas tax idiots act like there aren't any consequences? If high gas prices worked so miraculously then we wouldn't have needed to pump tens of billions of dollars into the automakers to keep them from going bankrupt and those high prices wouldn't have been labeled as an "energy crisis". Our country and economy isn't built or prepared for transportation prices anywhere comparable to Europe's.

        And the sales of trucks and SUV jumped because dealers were offering 50% discounts and affluent buyers (who could car less if prices went back up) were snapping up the good deals.

        • 8 Months Ago
        How would a gas tax work??
        >It's very simple. You put a tax on the price of petrol.

        We already had record high gas prices and what did that achieve exactly?
        >I remember people running heads over tails from their large, inefficient SUV's and trucks. And then prices dropped and Americans started buying satans F150 again.

        LOL at Americans trying to understand how taxes work.
      • 6 Years Ago
      This wouldn't work because hybrids and electrics are very expensive and the government would need to heavily subsidize them in order to make them appeal to the mainstream crowd. Consequently, it is likely that a gas hike would result in the majority of people keeping their existing car and just absorbing the extra cost, which would be politically unpopular and would not achieve the desired effect.

      Heck, I come from the UK and fuel duty is raised every single year. It's had absolutely no effect on green car consumption (but the high oil prices last year did).

      I don't think a gas tax will be necessary. As we start to consume less oil, Opec will contract its supply to maintain revenue, thus raising prices. They've already said oil is too low right now.
      • 8 Months Ago
      Actually, there are plenty of economists who love the idea of a gas tax. Greg Mankiw (Bush's economic advisor and Harvard prof) is a huge proponent of the gas tax. It's just not politically feasible. Personally, I think the gas tax would be so much cheaper to implement than using govt bureaucracy but CAFE seems to be the only way to bring better technology without affecting the poor's mobility. I mean even if you use the tax to subsidize the poor's gas costs, there will be a lot of heads rolling on the Hill.
        • 8 Months Ago
        Well removing gas subsidies has the same effect as raising a gas tax: make gas more expensive. The problem with the tax in the first place is that it limits the mobility of those who can't afford to travel. For example, if I'm poor and I have to buy food, housing and transportation, I'd have a pretty tight budget. Firstly, I'd have to live 50 miles out from the city to rent something I can afford. Secondly, do I buy McD's everyday for food? Or how am I going to afford a tank of gas every other day?

        So I like your idea of making E85 and diesel more attractive but it still doesn't solve the dilemma of allowing poor people to drive to work.
        • 8 Months Ago
        Seth, your math is reasonable but I still think it's political suicide. I used the poor as an example b/c they can easily be used for some anecdotal evidence in a politician's speech. But I can see lobbyists for fleets arguing against a higher gas price as well. Once you add a subsidy or cut a tax, it's near impossible to get that reversed.

        Polo, I only use Mankiw as an example b/c he's probably the most well-recognized republican economist supporting the tax. You can find scads of democratic economists in favor of the gas tax.
        • 8 Months Ago
        Ok, but now we have to get real numbers. By removing the subsidy ('smaller' government) the price at the pump would go up, but not due to 'taxes', and the govt has more money to pave roads, or typically use for some other purpose.

        Who are these 'poor' people (what constitutes poverty for the sake of this discussion?), this special interest group that we are all afraid of hurting, how many are there, and 'how much' more money would they realistically be spending given the typical car that they drive, and how will that impact their annual finances, and subsequently the overall state of the economy. Does it help/hurt growth? Does it help/hurt trickle down economics? Does it help/hurt unemployment? What is its impact on inflationary pressure?
        In other words, if these people who we are protecting by stopping any rise in gasoline prices drive 15,000 miles per year, and have a vehicle that gets 18mpg, that is 833 gallons purchased, if the price went up 10c due to a removal of some subsidy in the supply chain, in that 12 month period assuming gas stays at a constant price (ha!), that is $83 - for the whole year!
        In that 15000 miles, assuming a 200 mile range per tank, that is 75 fill ups.
        That means each fill up they can expect to pay an extra $1.10
        How much is a candy bar again?
        • 8 Months Ago
        Instead of taxes, are there subsidies on regular gas that can be removed? They can keep subsidizing the alternatives to keep those prices lower. After all, if they can tweak it so that E85 is 30% cheaper than regular gas, you reach a parity in cost so that it is a financially desirable alternative. Also by raising gasoline to the price of diesel (which has only recently happened) you shift people into the higher taxed diesel which incidentally gives people better mileage and lower cost of ownership.
        Also, they can really raise the rebates for efficient cars (diesel, hybrid, electric, or just plain efficient), so that there is more competition for these vehicles on the market which is the govt. indirectly subsidizing research into efficient vehicles because the market suddenly demands them and the companies will use their R&D to bring out the best. This way there are more vehicles on the road, and more trickle down into the used market so that there are more choices at lower prices.
        But this all goes back to the fundamental issue that roads need to be maintained and if people drive less where will the money come from?
        • 8 Months Ago
        "Actually, there are plenty of economists who love the idea of a gas tax. Greg Mankiw (Bush's economic advisor and Harvard prof) is a huge proponent of the gas tax."

        Did you seriously just cite BUSH'S ECONOMIC ADVISOR???
      • 6 Years Ago
      Since when has it become morally unproblematic to deprive people of more of their hard earned Dollars just because one fancies such cause or other? Do people's earnings and wealth belong to them or does it belong to any activist who scream hard enough, e.g. anti oil?
      • 6 Years Ago
      The ultimate question will be - what is it worth to not use fossil fuels (or at least gasoline)?

      If the ultimate goal is to reduce usage of gasoline, a gasoline tax is potentially the most effective way to manage that on a global economic scale. Mandated fuel efficiency won't do it on its own (and won't have enough economic impetus to be successful without it).

      And arguably, we already are paying a gasoline tax indirectly. It's called the Iraq war - which ultimately stemmed from a policy of ensuring cheap gas.
      • 8 Months Ago
      Increasing taxation (especially in a downward trending economy) is definitely not the answer! Especially if you try to socially engineer it via subsidies to certain groups. Places, such as western Europe, where they have taken this approach, seem no better off (many would say worse) than we are in the US.

      The only shortage of available gasoline (or natural gas) feedstock is domestic. And this is primarily because of self imposed regulations. If the Feds would get past all of the carbon tax idiocy and instead actively push domestic production, we could supply significantly more of our demand.

      The technology (and regulations) are currently in place to drill, produce, and refine in environmentally sound manners. This is an area where new technologies have been developed, deployed, and matured over the last 30 years. With more to come.

      This would give time for adequate R&D and market-based field trials to be done to determine the next dominant transportation (and electrification) fuels. The consumer marketplace, given adequate time, will make an adequate selection. Not a governmental imposed "right now" boondoggle (such as corn-sourced ethanol has proven to be).

      Our biggest problem is our government's "crisis" mentality. Outside of Washington (and their special interest group interests), we are not running out of fuel, the earth is not going to melt (or freeze) anytime soon, and pollution levels are generally trending down.

      There is adequate supply and environmental controls to keep gasoline and diesel as the dominant transportation fuels for the rest of our lifetimes. A gradual phase over (to whatever the next gen fuel ends up being) is the most efficient process.

      A sensible approach is to use all of the domestically available fuels (oil, natural gas, coal, nuclear, etc.) aggressively while the entrepreneurial creativity that made us one of the greatest nations solves the next generation fuel(s) problems. Current (not new) governmental R&D spending, redirected properly, could aid this process.

        • 8 Months Ago
        Wow. The "drill, baby, drill!" argument.

        I'll agree with you on a couple of points. There is some degree of regulation that's getting in the way (refiners now have to produce WAYYY too many grades of gasoline; it should be rationalized to a few blends). And, no, we probably won't see the full replacement of hydrocarbon fuels in our lifetimes.

        I'm not big on the "peak oil" paranoia, but we do seem to be running out of "easy" oil. New supplies require more and more resources to locate and bring on stream. That tint on your eyeglasses might be a little on the rosy side.
      • 6 Years Ago
      1.If they can punitivly tax gas to change/limit ( what ever) what else can they tax. How about we put a 100,000 tax on guns so that while we still have the right to bear arms according to the 2nd amendment we defacto cannot. Or how about we charge 100,000 for a drivers license and just stop people from driving at all

      2.Goverment does not and should not need the funds.they have enough already when 40%of a 70,000 salary goes to pay some type of tax. Gov' already taxes enough to do what govt should do ie that which the individual cannot do like provide roads, trash pick up , defense, legal system and jails, etc. If they would leave the things that an individual can do for themselves to the individual( gong to the daoctor fo every day ills, caring for the poor, college, resucing gm and chrylser and citi bank ) and avoid politically motivated things like wild ass defense projects, bridges to an island of 50, earmarks and buying votes with free health care, programs and farm subsidies etc then the roads would be fixed and no call for more tax money

      3. You have faulty logic built in to the question.You assume that the use of oil is bad. if so why is it? Your question assumes one of 2 things. Your questions implies that either inexpensive fossil fuel is bad because it causes global warming or you think that the money transfers funds to isalmic extremists (or if you are prejudice against arabs- to them). If either is your assumption you need to answer the validity of these assumptions to up hold the integrity of your question- why do you think global warming is happening when lead sceintist at the EPA says that the earth has cooled since 2001 while fossil fuel use has exploded- why do you think it is better to use a high tax to restrict oil imports over using the oil we have in the us and just offshore instead

      4. As California demonstrates high taxes strangle econmoic growth and ultimatly are unstainable as and economy is strangled by the endless cycle of high taxes creating low profits which drives down taxable income.

      5. Why not instead-cut gas taxes by 30% thereby reducing consumer and commercial costs, resulting in twice the consumption, olid economic growth and in the end collecting more taxes ( one gallon at 50 cent tax is 50cents- 2 gallons at 30cent tax is 60cents more money for govt -look at tax revenue history it always will work this way and always has)
      6. Where does the idea come from that the gov't but not the free market has the right to limit my liberyt and pursuit of happiness by seeking to artificially create a price spike that will make my ability to afford to put gas in and drive the car of my choice unaffordable
      . If someone is going to est a tax to chnge behaviour who decides how much and how it is collected and as americans should we not be provided the reasons as to such decisions
      7. It would make everything costs more from individual living to caost of goods at the store and that is exaclty what we need when times are tough - a rise in the costs of food and everything else.

      need more?-- a good course in micro and macro economics, human behavior and pshychology, would do you more good than a class on spelling would do me - and I know I need it
      • 6 Years Ago
      OK, so, I skipped over a few things in the middle, because this argument was getting a little stale, so forgive me if anything I say has been said before:

      1: A gradual, but expected, gas tax would be good. 1 cents a month would be about right. This means that there would be a DEFINITE $1 increase in 4 years- that is, first off, a decent period of time for auto makers to bring more efficient vehicles to the market (both PHEV's, diesels, and just really small cars with really small engines), and for the current generation of hybrids, clean diesels, and just plain small cars to drop in price.

      2: Oil prices are based on speculation. A slowly rising gas tax would probably make for some chaotic and immediate increases bigger than the 1 cent a month. Also it would probably drop disproportionately low because all the speculation buyers sell at some point. Overall this has little impact on how much money is actually spent, but psychologically, it makes the effect more immediate in the public eye.

      3: OK, so we are all saying "The poor get screwed" well, not necessarily. There would me a lot more money coming in. This could be spent on the poor. Now, the whole "Cash for Clunkers" thing is inherently stupid because, environment aside, the current economic situation was caused by selling houses and new cars to poor people who couldn't afford them. Thus, relying on new cars is stupid. However, providing a reduced cost public program similar to those extended coverage programs (like US Fidellis and such) availible only for lower income families with more efficient cars of any age could be possible, to keep as many geo-metros, toyota trecels, old Honda civics, old mercades diesels, and the like on the road as possible. These things all get great milage, comprable to most modern hybrids (though not quite as good as a new prius...but then again they cost 20+ grand less). Also this could be applied to motorcycles and scooters too. Efficient, small, helps with congestion, and parking. The inherent danger of motorcycle use is mostly effected by the prevalence of cars in our culture, because of this, the more people that ride, the safer it is to do so, and the more people there will be who are willing to ride.

      4: You could also pump money into public education, health care for poor folks, education and scholarships for poor folks (especially rural poor, who would be hit much harder than inner city poor), or subsidies for food companies to "green up" their transport infrastructure to help negate some of the impact on food prices.

      5: Directly improving roadways is not necessarily the best option for using the money on transport. Expanding public transport seams like a better option. Now, going back to the "poor folk" (or just middle-upper middle class people who don't want to buy a 30 grand prius), this is also something they can use.

      6: Don't add taxes to diesel, any biofuel, H2, CNG, LNG, or anything of this nature. Diesel is essential for heating, food transport, and international shipping, taxing this would create too much of a ripple effect in other industries, and cleaner fuels need to be an economical alternative.
      • 6 Years Ago
      Perhaps if the government spent ALL of the present gas tax on the roads, now only about 60%, like was intended, the highway infrastructure would be better.
      chip caruana
      • 6 Years Ago
      A gas tax is the only way to stimulate innovation. As the price of fossil fuels go up (and reflect their true cost), the best alternatives will find support based on merit, not politics. I would propose that the tax be raised one cent every week. That gets you the increase you need to spur conservation, the certainty that people want when making car purchase decisions and gets you $.52 per year to put towards road and bridge repairs as well as needed mass transit subsidies.
      • 6 Years Ago
      Polo said """Yeah, I'm so terrified that I support the cap and trade system and carbon taxes, and want to use that in place of regressive gas taxes to fund road works. I'm so terrified I think EVs should get $15K credits and hybrides $7,500 credits to boost sales and production. Maybe you just really don't know what you're talking about."""

      Can you please tell us how a cap and trade is easier, more fair, less liable to abuse, than a straightforward "pay at the pump" carbon tax (with a $500 yr taxpayer refund for those who don't want to live near work or otherwise conserve)?

      a $1gal (not 25cents) gas tax allows you to buy any car you choose, CAFE standards do not. It's no what kind of car you own, its how much gas you burn. Also, as electricity prices go up, labor gets substituted. For example, we could have a great thriving Pedalcab industry in many towns, with 10% unemployment what's not to love? Of course, the $1gasand energy tax can pay for Basic Health Care so people can accept lower wages, instead of going on welfare to get needed health care.
      • 6 Years Ago
      In leadership training at West Point, it is taught that it takes a combination of "positive" and "negative" reinforcement in order to influence personnel. Positive or negative reinforcemnt alone will not get the job done.

      This lesson holds true with the attempt to achieve foreign oil independence.

      It will take a combination of a gasoline taxes (negative reinforcement) and tax incentives (positive reinforcement) to influence personnel to migrate to fuel efficient and fuel independent vehicles.

      There is all kinds of support for tax incentives but virtually no support for gasoline tax increases. As a result we are doomed to fail in our quest for foreign oil independence.

      What a pity.........
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