It’s Fix the Tax Code Friday!
There’s been lots of discussion about the gas tax over the past few months, including on this blog. Today, we paid nearly $4/gallon to fill the tank of our Subaru Forester. It totaled nearly $50. A reprieve from the federal gas tax (18.4 cents per gallon) would have saved us $2.21. I’m not even sure that I would have noticed.
It’s been suggested that eliminating the federal gas tax would ease the pinch at the pump. It’s also been suggested that a rise in the federal gas tax would cut demand and thus result in cheaper gas.
What do you think?
Today’s Fix the Tax Code Friday question is:
With respect to the federal gas tax, should we raise it, lower it, get rid of it or leave it alone?
It’s actually the second argument I find interesting. The way I often here it presented is as follows: Cutting the gas tax would not make a noticeable difference to consumers and therefore, they would continue using gas as normal. Yet, an increase in tax, which would (presumably) create an equally slight increase in the price of gas would somehow modify consumer behavior.
Oh, and that should be hear, not here. Noticed as I clicked submit.
Do you think the car rental places or other business will drop their prices to reflect their savings or would they consider this a windfall to gouge the public more?
J,
I think it’s because folks notice the increases more than the decreases. It’s rare that I say, “Wow, gas has dropped 4 cents” but I will say, “Oh my gosh, gas is hitting $4/gallon.”
Maybe it’s human nature but I think we tend to notice the *bad* more? I don’t know.
GG,
Are you kidding me? 🙂
I think that rental car places are likely to offer deeper discounts for long term rentals but I think they’ll take advantage of increases in airfares, etc., to raise prices.
I say, leave the gas tax alone or even raise it. We gotta get weaned off of our dependence on foreign oil.
I suggest a $5,000 tax on new gas guzzlers and $500 a year to license them. If you can afford $40,000+ for these oversize monsters you can afford to contribute to the support of our country.
JS –
The UK has a similar (and unpopular) tax. But it also appears to have the result of raising revenue and decreasing demand for bigger cars. Studies have also suggested that pollution levels in cities appear to be dropping.
I personally don’t understand the appeal of large vehicles. I have a big family (5) and we drive a Subaru. On occasion, for a long trip, we’ve rented a minivan (shh, don’t tell anyone). I have friends with Tahoes, Yukons, etc. – one friend cannot park her SUV in her garage in her NEW home because it doesn’t fit. Complains about gas. Paid $60k+ for car. So…. what’s good about it? I just don’t understand. Very happy with my smaller gas tank – esp these days.
I know people who will drive cross town to save 2 cents per gallon not understanding that it cost more to get there than they saved. If drivers see the price go down by 18 cents (a whopping $1.80 for a 10 gallon fill up) they probably would drive as usual or more. The tax is used to maintain our infrastructure. If it were elimated the funding would have to come from somewhere else. The presidential candidates fail to mention thist when touting elimination or suspension of the tax.
Leave the tax alone! Taxes raised by gasoline/diesel sales “supposedly” go to road construction and maintenance. A “tax holiday” would not save money for customers who would continue to drive as there is no tomorrow. States and the Federal Govt would be forced to curb or curtail road projects due to lack of funds. That in turn would cause un-employment to rise and a domino effect in the transportation section.
As it is a national issue, it will take a national effort to solve. Turning the oil industry toward alternative sources of energy may be a way. Void their tax loop-holes currently given for oil exploration, and instead hang a carrot out for those who wish to switch to other forms of energy and “show results”.
We as a nation must resolve this issue now, or be held hostage to the world and its influence.
I strongly favor raising the tax. It always amazes me when I hear complaints about “high” gas taxes. As a comparison, the gas tax in Germany (and other western European countries) is around 0.65 Euros per liter which is equivalent to $3.85 per gallon. I am not saying that we should raise it quite that much, but adding on 50 cents per gallon doesn’t seem unreasonable to me. Maybe then will we finally get around to investing adequately in fuel efficiency, public transportation, and alternative energy sources.
RAISE the gas tax!!!!
Then again, I do 50%+ of my trips by bike, so I may be in the minority here.
Sorry for posting again so soon, but I had an idea.
Raise the gas tax and use the money to build bike lanes. It’s been shown with more SAFE places to ride their bikes more people will ride them. More people riding their bikes actually will reduce demand for gas and prices might actually stall. (they probably won’t drop)
Gas taxes should definitely not be cut. I say leave alone, or raise them (and this from a conservative republican with libertarian leanings). One way or another, commuting and travel habits need to change, and we need to be less reliant on foreign oil.
Wouldn’t it be wonderful if people like us who are responding to questions like these, actually ran our government instead of the rich politicians who are in charge to day? I say stop paying all those senators and representatives so much money for doing nothing. If they actually had to worry about the same issues the common man does, maybe things would change.
Can’t argue with Keith’s logic.
My two cents on the tax is to raise it, for most of the same reason’s cited above by the others. Put the extra income into universities willing to research and develop more alternative sources of fuel. I read the other day that at the current 18.5 cents/ gallon, the federal fund will actually be going into the red in 2009, in essence, that 18.5 cents doesn’t actually cover all the road maintenance currently being done, let alone any upgrades.