Ford CEO Wants to Explore Gas Tax

When can you tell an automotive executive is new to the business? When he suggests raising the federal gasoline tax. While a few politicians have thought about raising the gasoline tax from the current 18.4 cents per gallon — states add their own taxes, up to 32.1 cents (we’re looking at you Wisconsin) — to 50 cents to encourage fuel thriftiness, common thinking in Detroit is such a tax would hurt car sales.

Ford’s new CEO Alan Mulally said such a tax should be explored. He didn’t understand how much attention such a statement would get and quickly retreated, saying it was worth discussion if not immediate action. All this talk of gas taxes is in response to new legislation for raising fuel economy to 35 mpg per car and truck. That legislation was defeated in favor of a new proposal of 32 mpg for trucks and SUVs and 35 mpg for cars by 2022. The difference between the two bills still seems minimal to us, but the new standards are backed by the automakers who say they’ll still lose $50 billion with such a hike, due mainly to new engine development.

Comments

"we’re looking at you Wisconsin"
Tell me about it :(
This IS the stupidest thing I’ve ever heard, that's all we need is another tax, it will not help.

1 of the frequently seen Detroit tactic:

Don't blame it on the domestics auto manufacturer (for not able to make fuel efficient engines/vehicles @ a cost-feasible level); blame it on the consumers (for not paying enough taxes when pumping in your gas > so more gas tax)!

I wonder how those die-hard domestics fans will react to Ford and Chrysler's proposal, especially to those truck & SUV owners?

Remember, supporting them all the way = you agree with the tax hike too.

gas tax hikes are needed for many reasons.

1. the gas tax was last raised in 1993 and has been eaten away by inflation and increases in fuel-efficiency.

2. more revenue is needed to build roads and maintain creaking infrastructure. Exhibit A: I-35W bridge in Minneapolis.

3. gas taxes are a better way than CAFE to curb excessive oil consumption. The harm gas consumption causes to society (pollution) is not reflected in the price so we consume to much of it causing more local pollution and accelerating global warming.

4. excessive consumption also causes increasing dependence on unstable countries abroad and helps enrich unsavory leaders in countries like Saudi Arabia, Russia, Iran and Venezuela.

5. CAFE will restrict vehicle choice by decree. However, gas price hikes would give consumers the choice. DO I still want that V8 Ram despite the high fuel prices. CAFE just eliminates the RAM (just an example).

You can't raise gas taxes to European levels overnight, but a 50 cent increase should be ok if phased in over several years (and maybe compensated by reducing other taxes). It may be more politically wise to start increasing taxes when (if) oil prices come down. Clinton really missed an opportunity in 1999 to start hiking taxes.

"This IS the stupidest thing I’ve ever heard, that's all we need is another tax, it will not help."

...but most people have tunnel vision and can only see the short-term impact so any tax increase is likely to be a political dead animal.

Increasing the gas tax makes a lot more sense than mandating a fuel economy for the car fleet. The number of miles we drive here has only increased since the first CAFE standards were introduced. And taxing the fuel largely lets the consumer decide how important good fuel economy is - if I can afford to use more (and more expensive) gas, then I'll buy the huge truck. If I can't, I'll buy something that uses less gas.

Now, there needs to be an offset somewhere so that people aren't priced out of driving to their jobs and so on - ideally we could get rid of some other tax that wasn't related to actual fuel use but was still related to roads & transportation.

I'd also like to point out that all of the auto companies (Detroit, Japan, Europe, wherever) are quite capable of producing small, efficient cars. The problem is, not enough people want to buy them to make it profitable to make many. We mostly want big, comfortable, fast cars or big trucks that can uproot our houses (don't get that one personally, but whatever). Just look at the cars from twenty years ago compared to now - the midsize cars from then are the size of compacts now, and many SUV's and pickups could blow away the performance cars from back then. Do we need that much power? No. It's fun, but we should be prepared to pay for it if we want it. I'd much rather do that in a way that I have control over than through across-the-board cost increases to meet a fleet economy average.

The biggest fallacy in these CAFE debates is that it's the Detroit automakers vs. everyone else. Not true. Companies united in opposition to recent bills comprise German and Japanese brands too, including supposed environmentalists' beloved Toyota.

This is a free market, and the domestic automakers don't need to be punished. They're already getting their comeuppance for focusing on profitable gas hogs, exploiting loopholes and allowing their more efficient models to lose market share to foreign brands.

They weren't subject to windfall profit taxes back then, and they shouldn't be bailed out now. This is a great example of capitalism actually working. That said, asking manufacturers alone to fix the problem is preposterous. The reality is that it will hurt all automakers, and the domestics are just the ones on the shakiest ground already and with the most established lobbies in Washington. They're carrying plenty of water for the other guys.

The manufacturers are partly responsible for the notion that efficiency gains are simple and/or cheap. Too many of them have sold hybrids at a loss, and still do, and several give the impression that their experimental fuel-cell cars -- each valued at roughly $1 million -- could show up at your dealership any day now. All the same, none of them can do what's being asked of them in the most stringent proposals -- not at the scale we're talking about, and not if they want profit. Remember: capitalism. Car manufacturers aren't a public utility.

A gas tax is an _excellent_ idea, so long as it's combined with other steps that make everyone share the burden. The government has to come up with incentives for consumers and/or manufacturers for efficient (not just high-tech) cars, and consumers have to revise their notion of need when they buy a vehicle. They have to learn the difference between a car that's modestly powered and one that's truly underpowered. As a reviewer, I'm sick of hearing people describe a car whose engine is revving into higher rpm as "straining." It's not straining. It's doing what it's supposed to do to give you power when you need it without pissing away fuel when you don't.

If we've learned anything from tracking these issues over Cars.com's nine years it's that high gas prices make people consider and buy more efficient vehicles. Economic doom was predicted as gas prices inched over $2 per gallon, and then again at around $3. You know what? It's caused some hardship for some drivers and maybe raised product prices here and there, but the world hasn't ended. Higher gas prices are the simplest and most effective way to create the necessary shared sacrifice. --JW

"Increasing the gas tax makes a lot more sense than mandating a fuel economy for the car fleet."

Tom, this is EXACTLY where the problem is with your statement. Because it's NO LONGER a responsibility on the manufacturere. It's NOW an issue that the consumers have to deal with themselves. What this will lead to is the lack of "pressure" for the manufacturers to build energy efficient engine. I'm not sympathetic to those who buy big SUVs or Trucks for daily commute, but to many, they don't have any chioice of going to work using their vehicle. Furthermore, the US lacks even an adequate public transport system to help those who will be impacted most by this gas tax. If you look at the Europeans and Japanese, yes, they do have a gas tax, but it's not sthg like here, which is, buy the car at cheap price, then you (the buyers) suffer when you pump in gas for the 1st time. In Europe & Japan, there are various taxes that actually STOP people to buy cars that are inefficient (unless the buyers are extremely wealthy). As a result, most cars sold in Japan & Europe are fuel effiicent/small cars. This forces the manufacturers to build small & fuel efficient cars, and cut back on big, luxury but gas consuming ones. Now that's the way to do it.

"I'd also like to point out that all of the auto companies (Detroit, Japan, Europe, wherever) are quite capable of producing small, efficient cars."
Just take a look at some of the speeches given by GM & Chrysler. They've repeated state that Detroit can't produce small, efficient cars - because of profit margin & UAW! Have you ever wondered why GM has used the now non-defunct Daewoo & Chrylser on Cheryl to build their small cars?

MOST IMPORTANTLY, DON'T JUST THINK OF THIS TAX HIKE AS AN EFFECT ONLY TO JUST THE CAR INDUSTRY, BUT IT'LL ALSO INCREASE THE COST OF ALL OUR DAILY NECCESSITIES - FOOD, MILK, MEDICATIONS, ETC. AS THE HIKE WILL MEAN INCREASED COST TO OTHER INDUSTRIES, WHO WILL SIMPLY PASS IT ONTO THE CONSUMERS! So Gas Tax increase will also GREATLY affect those who DON'T drive cars at all!

Now that's the real face of Corporate America in Detroit, shifting the responsibility from itself, use this "sound good" speech to make you think that only a few sector will be affected, and say nothing about all the negative impact that this may bring...

The problem isn't the lack of income to the government,,, it's the lack of spending discipline.

You can't blame them though, I'd love to drive a brand new 360 Modena every day, then go into my boss's office and TELL him he needs to give me a raise or I will put him in jail.

But who will we tax when we all work for the government?

I am personally against higher gas taxes because of its potential for negative effects on the economy. I also think there should be tax incentives for more fuel efficient vehicles as well as a gas guzzler tax on trucks/SUVs not just luxury/sports cars