Tuesday, January 6, 2009

Gas Tax?

This week it was revealed that truck and SUV sales have gone up and are outpacing cars. Yes, people are short-sighted or simply stupid...or both. However, people who can afford $4-5 a gallon gasoline in SUV's aren't that dumb so I'll spare them, but I'm going to guess that all these people buying SUV's don't fall into that category. Due to this, some (here, here and here) are calling for a gas tax to raise the price of gasoline to help wean our addiction to oil.

While I agree with Sullivan on most issues, and I agree that we need to end our oil dependence, I can't fall into line with this idea for two reasons. First, a gas tax is indiscriminate and punishes those who are moving the market in the proper direction (high mpg car owners). Yes, I know that those who have motorcycles or fuel efficient cars will pay a smaller penalty, but they are paying a penalty nonetheless for behaving in a desireable manner (reducing fuel consumption). Why should we punish good behavior? If this was the only way to discourage which types of cars we bought or how much gas we consumed, then I would be in favor of it, but there seems to be a less restrictive mean to accomplish the same goal - I'll get to that in a bit. Second, the economy is still in the shitter and it is getting worse everyday. The most learned financial advisers and economists still don't have a clue on how bad it is going to get or when we are going to start seeing the light of day. For this reason, I don't think we should implement taxes that raise the cost of doing business or living needlessly. If we raise prices again to summer levels, would that push us over the edge economically? I don't know the answer, but I don't want to find out either.

Instead of a gas tax, wouldn't it make more sense to tax the cause or the leading contributor of gas consumption - the SUV's and trucks themselves? This way, those who have moved the market in the proper direction and intelligently bought fuel efficient cars will not be punished at all. Doesn't this establish a clear incentive for those looking to purchase automobiles? This atleast seems a little more fair because those who are increasing our burden are bearing the cost themselves. Why spread the burden across the populous when a specific group is (more) responsible? Furthermore, even though the tax on the trucks and SUV's may have an adverse effect on the economy, it will be far less dramatic than that of a gas-tax on almost every citizen, thus we could hopefully avoid falling off of that economic cliff.

Hey, perhaps gas is going to stay cheap for years to come and we are climbing out of the recession, but as of right now we do not know. Until then, I think we should take actions that accomplish our policy goals but only through the least restrictive means possible.

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