Washington D.C. Auto Show: Do We Need a Higher Gas Tax?

Volatile fuel prices — AAA says the national average for a gallon of regular was $2.98 a year ago, $4.11 last July and $1.89 today — have led to calls from prominent car dealers for a higher federal gas tax. Right now, the federal tax is about 18 cents per gallon; on average, states add another 27 cents. The idea is simple: Higher gas taxes encourage buyers to purchase more fuel-efficient cars, and the extra revenue goes to fund public transit, infrastructure maintenance and the like. Gas prices in many European countries are the equivalent of about 60 cents for every dollar.

“Cheap gasoline combined with fuel efficiency mandated by the government is an economic disaster for America,” Mike Jackson, CEO of dealer group AutoNation, said at an Automotive News conference last month. He’s pushing the idea of a $1-a-gallon tax phased in over five years.

At today’s Washington, D.C., auto show, former Secretary of Transportation Norm Mineta said he disagrees. Mineta, who also served as Secretary of Commerce during the Clinton administration, acknowledged that carmakers “just get whipsawed” by fluctuating fuel prices. Case in point: With gas prices plummeting in December, hybrid sales were down 10 percent for 2008, further hurting automakers’ chances of getting a return on their investments in such technology. But Mineta said he thinks a higher gas tax would do more harm than good.

“I’m not convinced in today’s marketplace that a gas tax is a sustainable form of revenue for building infrastructure,” he said. “Sure, I’d like to see a 40 cent [federal] gas tax. ... But in terms of impact on the public, I would just not want to dampen the potential [for economic recovery]. There are other ways to deal with marketplace demands.”

Mineta advocated a gas tax increase during the Bush administration, but Bush disagreed.

It seems everyone at the D.C. show has a stance on the issue. Auto Alliance CEO Dave McCurdy pointed to a gas tax floor, an option in which a variable tax raises gas to $3.50 a gallon; if gas is higher than $3.50, the tax is withheld. The group is an advocacy organization representing 11 automakers.

Roland Hwang, vehicles policy director at the California-based Natural Resources Defense Council, said he thinks the task of stabilizing fuel prices belongs to major players like power plants, large industries and oil companies. Increasing the federal gas tax would be “really, really politically difficult,” Hwang said.

Are gas taxes necessary to move people to more fuel-efficient rides? Perhaps we remember the sting of summer gas all too well: The nonprofit Consumer Federation of America’s latest survey, released today, reports that despite gas prices under $2 a gallon, most consumers intend to buy a vehicle whose mileage averages 5 mpg better than that of their current car.

We’re interested to hear what you think. Weigh in with your thoughts below.

Comments 

Hector - Chicago

the only way to encourage behavioral changes in America is to HURT the pocketbook.

I vote yes.

Yeah, put more people out on the streets to rot and die when they're already unemployed and have no money. And just rub it in their face with this.

Happymantis

I agree with Hector...
Billy, I doubt the situation would be that dramatic, every major legislative step taken will have its drawbacks, but given what we stand to gain from the gas tax, I think it would be best to allow the government to increase the gas tax and increase funding for our country's creaking infrastructure, and it also help out domestic and foreign automakers who are unsure if they should bring cleaner and higher efficiency vehicles stateside.

Original sheth

If the country wants more efficient vehicles to be sold we need a gas tax increase. If the CAFE rules are being left alone and we are taking the free market approach than gas prices could be left alone. It seems that we are already moving in the direction of demanding much more efficient vehicles from automakers which basically means we need higher gas taxes to stimulate demand for the cars we are forcing them to build.

I'm a little confused as to why Mineta was for a gas tax increase a few years ago but is now against the idea and claiming it will do more harm than good. He says there are "other ways" to stimulate demand but doesnt lay out those alternatives.

George

What happened to all the CAFR money?

John

i personally think this is stupid because all itll do is make people never go anywhere again...i know if gas gets higher than $3 again im not going anywhere for a long time

How many of you in favor of higher gas taxes are currently paying more taxes than you have to? If you're not paying more now voluntarily, why do you want the government to force you to pay more?

Or is it that YOU don't want to pay more, but you want the government to force someone else to pay more?

Mike

Gas taxes are not going to make "someone else" pay more. It will keep a level playing field for all. If you want to waste gas and commute singly in an explorer, hilander, or pilot, go ahead it is your "right" to (thanks for raising demand). But expect to pay more for it even if in taxes. Bridges, roads and infrastructure needs to be kept up and it needs to be payed for. Trying to shirk off responsibility for paying for it is shortsighted.
PS. Anything to keep the toll booths away!

Belly

The idea for an increased gas tax is not to improve infrastructure, it is for keeping the price of gas high so that people won't use as much. And it is anything but a level playing field. Those who are low income and fixed income cannot afford things like this. It totally screws the middle class. It hits all those who drive, and will disproportionately affect those in areas without public transportation. It will be just like inflation. An increase in the gas tax is one of the worst policy decisions out there, especially right now with a bad economy and already decreasing demand for gas.

Josh Larson

I am 100% in support of it, especially while gas prices are (relatively/comparatively) low. We need to alter peoples' car choices and driving behavior, especially in light of the upcoming CAFE changes. Automakers will sell what people will buy, and it saddens me to see hybrid sales drop so significantly when gas does. So if we can keep gas prices higher, more people will by hybrids and more fuel efficient vehicles, and, in turn, the automakers will build more of them.

Bill Bretford

This couldn't be worse idea. I pay enough in taxes, and gas really is not that low at 2/gallon. I am a small business owner in construction and when gas was at 3 and up it nearly put me under. I had to sell off two of vans because I couldn't afford to use em anymore. Seriously to all the liberals out there who think this is a good idea, you can pay the tax.

Original sheth

Bill:

Newsflash: I read an article on cnn.com in which a wealthy businessman who was a Republican endorsed the idea of increasing gas taxes. Any increase would have to be phased in so all of this talk about an increase leading to middle class families living on the street is nonsense. I dont think anyone WANTS to pay more for gas. The question is whether a gas tax increase would help automakers meet the upcoming CAFE demands and reduce dependence on oil. The answer is "yes", its really not even debatable.

As for the poor, there would undoubtedly be tax brakes for them to offset the gas tax increase. On top of that most of the poor either drive smaller, more efficient cars or use public transportation. If you want to help the poor you could make public transportation cheaper for them to use since that is more of a factor than gas costs for many.

Original sheth

Bill:

I would say gas is cheap today at $2/gallon. It was higher in the 70s and 80s when adjusted for inflation. If gas increased in cost at the same rate as inflation it would be far higher than it is today.

Nope

Have the government further regulate our freedoms? Sounds good if you live in Cuba. Seriously, gas right now is low, enjoy it while it lasts. We all know this wont stay this way forever. If the government wants to reduce demand then they need to promote alternative fuel sources, and also increase our domestic production, new jobs anyone? The economy is already reeling from the crisis and soon enough all this free money that has been handed out at tax payer expense is going to come due. I don't think we need any further taxes on top of that, do you?

Original sheth

Nope:

Where do you get off assuming that higher gas taxes will mean a loss of jobs? First of all gas is going up eventually anyway. If the increase is based solely on the price of oil the windfall will go to ExxonMobil and foreign countries that export oil. Adding to the gas tax will slow consumption, keep our dollars in the US and eventually slow the rise of oil prices worldwide. If the largest consumer cuts back on usage it will keep a lid on prices. It makes no sense to keep the tax low just so demand can pick back up only to watch billions flow into coffers in OPEC countries. The last thing those countries want us to do is enact higher gas taxes.

In addition, higher gas taxes will mean more demand for replacement vehicles that are more efficient. You need people to make all those vehicles and develop the technologies required to make vehicles more efficient. I am against CAFE in a vacuum. If we insist on having CAFE we need higher gas prices to make CAFE palatable.

Nope

To Original Sheth

I never said that the increase in gas tax will cause the loss of jobs, although they potentially could contribute to them. What I said was by both exploring for and using our domestic sources available now we can increase jobs. Also by increasing our research into alternative sources this could also increase jobs.

You mention that increasing gas taxes would increase demand for vehicles that are more fuel efficient, I don't know about yourself but not everyone can afford to replace their vehicle. And for those that can't I guess they will just have to 'suck it up' and pay more $$$? Or should the government by vehicles for them?

Belly

I read an article on cnn.com in which a wealthy businessman who was a Republican endorsed the idea of increasing gas taxes. Any increase would have to be phased in so all of this talk about an increase leading to middle class families living on the street is nonsense.
-Again you are off on the BS train. So what if it is phased in? It still costs people more, and salarys are not going up. So it is not being made up for.

If gas increased in cost at the same rate as inflation it would be far higher than it is today.
-So what? It is what is and people have adjusted to a certain lifestyle as have their salaries. By saying it could be higher doesn't make any point whatsoever. Take it from this point forward and you can see that a gas tax is a terrible idea in the present day economy.

Where do you get off assuming that higher gas taxes will mean a loss of jobs?
-When will you stop being ignorant of the economy when gas was around $4/gallon?

If the largest consumer cuts back on usage it will keep a lid on prices.
-This is already happening, therefore there is no need for a gas tax

It makes no sense to keep the tax low just so demand can pick back up only to watch billions flow into coffers in OPEC countries.
-You don't even know what low is. You try to compare it to European countries taxes, but yet you don't talk about all the benefits those countries have that we don't. If you like analogies, that is apples to oranges.

dave v

Yeah, raise government involvment, raise the taxes, and take 5 bucks more out of peoples' pockets that they need to dish out for gas. Which liberal elitists came up with this idea?

And to all of you who think poor ppl MOSTLY drive cheap, fuel efficient cars, think again.

When you have a limited amount of revenue gained from income, you'll buy what you can get. And on 9 out of 10 days, a 1997 Taurus with 100k miles will go a hell of a lot cheaper than a 1997 non-American civic with 150k miles that liberals would buy to "save' the environment.

My a$$...save my wallet before anything else.

Original sheth

belly,

The fact that you dont like an idea doesnt mean it doesnt make sense. In fact there is likely an iversely proportional relationship between the two. A gas tax makes sense IF you want to accomplish certain things. It doesnt make sense if you want to maintain the status quo. The government has already signaled it doesnt want the status quo by moving forward with the increased CAFE numbers. If nothing is done to address the demand for the cars that are coming you can rest assured more autoworkers will be out of work in the future.

BTW, I never said we should have prices that match Europe's prices. We cant sustain those prices here because of how this country is laid out. There is a lot of space between our prices and their prices. Also, I am confused as to why you have trouble comprehending gradual increases. Most people talking about this believe there should be a 5 year phase in period. This is not about doubling prices overnight. BTW, the gas tax is only 18 cents a gallon so even if it tripled it would only be 54 cents/gallon. I think it would have to go up 20 fold before it had the kinds of effects you are predicting. BTW, if gas taxes stay the same nationally you can bet they will increase at the state level as will tolling. I dont know if you have noticed but tolls are increasing all over the place and many states are looking into privatization of their roads and bridges which would allow companies to set high tolls. Why is that? lack of funding for highway projects that are paid for by gas taxes.

"Yeah, raise government involvment, raise the taxes, and take 5 bucks more out of peoples' pockets that they need to dish out for gas. Which liberal elitists came up with this idea?"

Bush's head of trasnportation backed the idea. Sorry to burst your bubble about "liberal elitist" conspiracies. Since you dont like the government and dont believe in taxes you might want to stay off the roads and bridges that are maintained and expanded using gas tax money. If you use any of the systems supported by tax revenue its pretty absurd to suggest no money should be coming out of your pocket to pay for this stuff.

Belly

In fact there is likely an iversely proportional relationship between the two.
-Good point, now which plan is the government going with? And which one does a bunch of money grubbing industry heads support?

If nothing is done to address the demand for the cars that are coming you can rest assured more autoworkers will be out of work in the future.
-And yet how does taking money out of the pockets of Americans, in a depression, serve to increase demand for a high priced investment like a car? Used cars maybe, new cars hell no.

BTW, the gas tax is only 18 cents a gallon so even if it tripled it would only be 54 cents/gallon. I think it would have to go up 20 fold before it had the kinds of effects you are predicting.
-You are ignorant to what happened in the wake of rising gas prices just two years ago. How does anyone get through to you? You are a brick.

I dont know if you have noticed but tolls are increasing all over the place and many states are looking into privatization of their roads and bridges which would allow companies to set high tolls. Why is that? lack of funding for highway projects that are paid for by gas taxes.
-I don't know that I support privatization, but having tolls and raising them is fine with me. Let the people who use the roads pay for them.

Since you dont like the government and dont believe in taxes you might want to stay off the roads and bridges that are maintained and expanded using gas tax money.
-First of all DS, I mean OS, I didn't write that, dave v. did can you read? I am not like you - someone who makes up all these false names just to make it seem like there is more support for my idea. There are millions of people who are against what you support, hardly enough of them would voice their opinion though. You already accused me of being an environmental wacko, now I must be a conservative fool? Dumba$$ there are people who are middle of the road who don't like idiot policy decisions, like a gas tax.

I also like how now you are trying to argue that this gas tax is now needed to support the crumbling infrastructure. Talk about bait and switch. There are other ways of raising funds for highways and infrastructure, and since you will ask how - tolls are one, increasing other taxes is another, and eliminating other spending is yet another.

Red

Belly speaks the truth. Sheth needs to get a job, a girlfriend or spend less time with Michael Phelps.

Original sheth

Red,

What exactly is Belly speaking the "truth" about? I didnt come up with the idea of the gas tax and this blog entry asked for opinions. Someone isnt stupid if they think a gas tax increase has benefits. Many intelligent people are discussing this idea. You would have to read more than Belly's entries on this blog if you want to see that however. Belly's posts are short on logic but long on name calling. The fact that you are complimenting him on this says a lot about where you stand. I generally find that people who cant formulate constructive positions resort to a lot of name calling and personal attacks when they get frustrated.

The important thing is that the cost of diesel is kept down in order to afford ease of operation in the transportation field. Often when the price of gasoline is artificially inflated it brings down the cost of diesel. This is why there are so many consumer level diesel vehicles in Europe.

Chad

If we add the tax, we could see $5 a gallon in July. I dont doubt there were sales drops in hybrids. In two weeks in January we had about 65,000 jobs lost. All car sales are failing. Nobody has the moeny to buy a brand new car. Lower income dont usually have small cars. They drive old cars and trucks that they have had for years. Poor are more concern about themselves. Dont are about emissions or the environment. They just trying to surive any way they can.

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