Cities are getting mighty creative in their efforts to fight rising deficits. No run of the mill income/wage/salary/vocation tax increases here. Philadelphia wants to raise its sales tax; Oakland is taxing marijuana and now DC is considering raising… its gas tax?
DC Council Member Tommy Wells (D) has suggested a gas tax hike of 3.5 cents. The tax on gas has not been raised in the District for nearly 20 years. Apparently, the justification for the tax hike is that gas is priced too low and this will bring it into line with the neighboring state of Maryland.
But, um, psst. Guys, over here: People buy gas in Maryland.
Not so much in DC.
Let’s face it. Nobody lives in DC. Okay, politicians do. But the latest guesstimates of population put the district’s total population at just over a half million. The total population for the “metro area” (read: suburbs of Maryland and Virginia) is over five million. My guess is that those folks aren’t flocking to DC for cheap gas.
Those in favor of the gas tax say that it’s time (maybe) and that additional revenue is needed (clearly). They also say that this is a great way to change “bad energy habits.” According to the Washington Post, “Paying more at the pump will make a new car buyer think twice about buying a gas guzzler; it may induce more drivers to switch to bus or transit.”
Um, nope. Not this tax hike anyway.
I’m all for increased use of transit. I take the bus every chance that I get and I am proud of the fact that, annually, we drive our Subaru Forester far less than the national average. But our behavior is not based on taxes or the cost of gasoline (quite frankly, it has a lot more to do with my limited patience with idiot drivers on the Schuylkill, but that’s another story altogether).
Taxes, like this one, meant to induce a certain kind of behavior are really only effective if they’re significant. A 3.5 cent hike in gas tax is not only statistically insignificant, it will clearly not induce masses of people to buy a different kind of car or to drive fewer miles. Assuming that the average driver logs 15,000 miles per year (that’s the federal average), a 3.5 cent gas tax hike would cost the driver of a 20 MPG car a whopping $26.25 for the year. People spend more than that at Starbucks in a week.
Other arguments for cleaner air and less congestion are (pardon the pun) pipe dreams. Look at those population numbers again. The District’s population sits at about a half million but about a million people find themselves in DC during the week. Those people don’t live in DC. And chances are, those people aren’t buying gas in DC.
So, let’s call a spade a spade: an increase in the gas tax in DC is easy revenue. Nothing more. Next.
A new study suggests that Canadians may be in support of a “carbon tax” on activities that cause climate change. The McAllister Opinion Research survey, commissioned for the Pembina Institute, revealed that Canadians would not expect such a tax to offset current taxes and would, instead, prefer that the revenue be used to improve energy efficiency and clean energy technologies.
According to a research analyst involved in the study, “The support for B.C.’s carbon tax is fairly uniform across Canada. Six out of 10 people definitely support it when you look at the numbers.”
Wow. That’s pretty overwhelming support.
But is it realistic? Perhaps. In the study, participants were advised that British Columbia had recently introduced “a carbon tax on fossil fuels to reduce greenhouse gas emissions.” Nearly three-quarters of the respondents characterized that as a positive step. In some areas, such as Quebec, the numbers trended higher than 80%.
All of the major political parties in Canada, including the Conservatives, the NDP, the Liberals and the Green party suggest some kind of a cap and trade system that would allow the market to set a price on pollution. In short, greener companies would pay less – and the biggest polluters would pay more. The Liberals and the Green party have also proposed a “tax-shifting” policy that would impose a carbon tax for everyone, including consumers.
Across the board, Canadians have suggested that income tax cuts would not be a priority so long as the revenues continued to support environmental programs – a fairly bold statement in today’s economy. I feel fairly certain that those in the US would not agree to a similar plan but I could be wrong.
I’d love to hear from my Canadian readers: are you on board with the idea of this tax?
And for my US readers: would you be agreeable to a similar program in the US?
Sigh.
It’s the day after tax season. Folks are tired and cranky (trust me, I get the emails). Nobody likes to pay taxes. And every year, you swear to do better, plan more, save more. Why not actually do it this year?
There are a couple of things that you can do throughout the year to lower your tax bill. And many of them can help you give back to the government, too.
Consider:
Buy a green car! Buying a hybrid car has environmental benefits – and tax benefits, too. Depending on the make of the vehicle, you could qualify for a tax credit of up to $3000. For a list of what qualifies in 2008, check out the IRS list of applicable credits.
Buy a green house! Oh wait. That doesn’t apply anymore… As of December 31, 2007, most of the residential tax credits (windows, doors, roofs, insulation, HVAC, and non-solar water heaters) expired. You can still take advantage of solar water heaters and solar panels remains in effect through December 31, 2008. A bill to extend the credits passed the House on February 27, 2008, but not has not passed in the Senate – the hold up is the offset in revenue by removing tax breaks for oil companies.
Buy green products! Sales tax can be deductible if you itemize – especially if you live in a state that has no state income tax. So, you can choose the products that you’ve been putting off – and save money, too.
So you can definitely save money (and the planet) by utilizing these tax credits and deductions. But let’s face it – creating tax policy that benefits the environment has not been a priority for this administration. Don’t let that stop you… State and local officials have recently been more receptive to offering tax incentives to taxpayers for green behavior – or tax disincentives to taxpayers with bad behavior (like in Chicago). Find out what the rules are in your state and locality – and if you don’t like them, fix them. It’s often easier to institute real change at a local level – give it a try.
Even if you aren’t yet energized to call your local council person, I still want to know what you’d change. So tell me, if you could add a tax incentive for going green, what would you do?
Is the UK going green?
You might think so. Since we’ve been here, we’ve been inundated with organic produce and eco-renovation television programming – my son is even using environmentally friendly diaper wipes.
What else is going green? UK tax policy.
The Chancellor has introduced a new budget which includes a substantial tax on higher carbon emitting vehicles. A new Range Rover, which is included in the highest category, can now result in a tax increase in the first year of nearly 1000 pounds (sadly, with the exchange rate, is equal to $2000).
The idea is to provide a disincentive for the average taxpayer to buy an inefficient vehicle. Unlike the 3p increase in beer prices, this kind of increase is likely to make a difference in taxpayer behavior.
Smart policy or destined to be a problem?
