Wide Angle Thinking - "How Taxing Is It? III"


Budgets need balancing; roads need repairing and CO2 needs to be reduced. All governments face these challenges. Is there anything that can address all three problems simultaneously?

How about raising the gas tax? In the U.S., the federal tax on gasoline is 18.4 cents and hasn’t been raised since 1993. In inflation-adjusted terms that is 40% lower than 20 years ago. Gas Tax Increase PillCountries in Europe have a gas tax that is many times higher than the U.S. and their citizens have adjusted by reducing driving, purchasing fuel-efficient cars and increasing carpooling. Higher gas taxes would produce revenue to bolster highway trust funds that are projected to run a $9 billion deficit within a few years. Increased revenue from gas taxes could also be used to bolster carbon reduction efforts thereby mitigating weather related disasters and escalating health care expenditures.

Not politically possible, you say? State governments in the U.S., including those with tax-shy, conservative governors, are leading the charge for higher gas taxes. Michigan’s Republican Governor, Rick Synder, is advocating a 73% hike in gas taxes. Says Synder, “This is common sense . . . we need to make the investment.”

One way to soften the political fallout is to change the tax to a percentage of motor fuel prices. That would allow revenues to rise with fuel prices and keep highway funding adjusted for inflation. Because changes would be automatic, the politically-delicate chore of asking for future tax hikes would be avoided. Finally, higher gas taxes should shrink oil imports and make consuming countries less vulnerable to the vagaries of the market. .

Doesn’t a policy that improves lives: physically, economically and strategically sound appealing? All we need are a few courageous politicians. Let’s hope we find some before conditions deteriorate and costs skyrocket.

Courtesy of Wide Angle Thinking.