Has the time come for a gas tax?
This is the question CNNMoney asks (somewhat rhetorically) today. With the average price of gas falling to around $2.30 per gallon the article wonders if it is now finally possible to implement an across the board gas tax.
While peaking gas prices over the summer caused Americans to change their behavior by driving less and buying smaller cars, with recently falling prices at the pump, there is evidence that we are once again driving more and buying bigger cars.
Of course, the now familiar argument in favor of the gas tax is that it will decrease our consumption of oil and increase the incentives to find alternative sources of fuel. The ramifications of such a shift would range from drying up the revenue stream of petro-states to decreasing greenhouse gas emissions.
If the government were to impose a $1 tax per gallon, not only would this reinforce the earlier change in behavior, but it would raise $140 billion per year in revenue.
However, we believe that for any gas tax to be truly effective, the revenues generated from it must be reinvested into alternative fuel development and public transit. As a study has shown, for carbon taxes to truly work, revenues derived from them must be reinvested into solving the problem the tax is trying to address. Otherwise, there is a risk that the revenue will merely become the government’s “cash cow” that can be directed to pet projects unrelated to the original problem.
Unfortunately, even with the incoming administration, no one should hold their breath for a gas tax. As Andrew Samwick, an economic professor at Dartmouth notes, in order to calculate the odds of Congress putting their neck on the line and imposing a gas tax, “you would have to invent a negative number for probability.”
- Similar Posts:
- Commission Recommends Raising U.S. Gas Tax
- A closer look at carbon taxes.
- Study shows carbon tax may not make big dent in driving habits
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