The Truth About Cars » gas tax The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Fri, 25 Jul 2014 15:48:26 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » gas tax No Fixed Abode: You did what they asked, and now you’re going to pay. Thu, 03 Jul 2014 16:00:59 +0000 Big_Brother_Americas_player

You’ve heard this story before: A scorpion asks a frog to carry him across the water.

And you know how it ends, too, I’d guess. It’s a story that has long fascinated me, so a while back I cooked this up:

You and I, standing on a riverbank
Desperately searching for a way to cross
“Take a ride on my back,” I said. “I’ll thank
You not to sting me, lest our lives be lost.”
Halfway across and I’m optimistic
That you’ve transcended your scorpion self
When suddenly there’s a prick and a stick
And that’s never good for a froggy’s health
So sudden we sank, and although you tried
To escape, we were so firmly attached
Both bitter, broken; no wonder we died
With flaws and faults that were perfectly matched

But if I’m honest, I wonder which one
Of us was frog, and which was scorpion.

Naturally, I had a particular woman in mind when I wrote that, but the analogy is true for more than romance; it’s true for those of us who live and work in the United States, particularly if we are inhabitants/inmates of the middle class. We’re the frogs who cross the river of commerce, paddling dutifully in spite of obstacles ranging from the ridiculous to the sublime. On our backs, of course, is our government. It always says that it’s trying to help us. Sometimes it even believes it. Its paid apologists in the media and elsewhere will always say that “we are the government”, as if a group of over-privileged mountebanks who don’t even have to use the same healthcare regulations they’ve forced on the rest of us represent the bulk of Americans in any but the most nominal fashion. Still, when the rubber meets the road, they’re on our backs ready to sting us to death the minute we hit deep water.

Here’s the latest idiocy to come out of our pincer-packing passengers: As I reported earlier this morning, the Federal Highway Fund is about to run out of surplus money. It’s funded through a static 18.3 cent per gallon gas tax. Yesterday, the Washington Post published a Wonkblog on the subject.

Before we go any further, notice the subtle framing implied by “Wonkblog”. The phrase “policy wonk” implies someone who is smarter than you or I might be. It’s typically applied to completely charmless would-be tyrants like Michael Dukakis, in order to suggest that they, and only they, are intellectually competent enough to determine what’s best for the rest of us. “Wonkblog”, therefore, implies that you’ll be reading some serious thought about an issue, instead of the type of ignorant pandering to the bleating, inbred electorate the use of which each party believes is limited to its opposition.

Alright then. Let’s check out the serious thought. The piece is entitled “Why we need to raise the gas tax — and then get rid of it.” First off, let me offer this:

To people who write for the Post, the government is “we”. To most Americans nowadays, the government is “them”. Fifty years from now, when our grandchildren are burying the bodies that will have been piled up as a result of that simple difference, it might be useful to remember how often it appeared in print in our day. The Post’s Emily Badger interviews a Democratic congressman from Oregon and fails utterly to badger said congressman, instead giving him a platform to gush about his plans to replace the gas tax. Let’s hear first about why said tax needs to be replaced:

The growth in vehicle miles traveled has actually declined for nine consecutive years. The increase in fuel efficiency has been pretty dramatic. And then we’ve got highway construction costs that have not been declining.

Emily lets this go, but I’m not inclined to. If we’re traveling less often — because we’re experiencing the Lowered Expectations lifestyle of the recession without end — why haven’t highway construction costs declined? If we are using the roads less, why haven’t we seen a corresponding decrease in repair costs? There could be reasons for it, ranging from the deferred bridge maintenance about which we’re always hearing to an increase in costs for petroleum-based paving materials, but that’s less important than the fact that Emily doesn’t question it. Of course, you can see her thinking, the government’s cost of doing anything will always stay the same, or increase. I’m okay with this.

We have to make a transition into something that is use-based… With greater fuel efficiency, hybrids, plug-in hybrids, electric cars, hyper-efficient diesel, people who are putting the same amount of wear and tear on roads and occupying space and creating congestion have wildly different payments that they make through the fuel tax.

In other words: We — and this time it is the “we” of the government — set up a variety of incentives to discourage low-efficiency freeway usage, from CAFE from blocking the Keystone XL, and people responded the way we hoped they would, and now we need to punish them for that. You, the consumer, invested in expensive technologies from the Prius Plug-In to the Tesla Model S to reduce our energy dependence, believing that you would be rewarded for doing so in lower fuel costs, and now that has to be taken away from you, because highway costs mysteriously stay the same when highway usage drops.

Having set up the pitch with minimal effort, Ms. Badger lets Rep. Bluemenauer start gloating about his proposed and preferred replacement: use tax.

We started in Oregon with a monitoring process. People are interested, it’s technically possible, and it changes driving behavior. When people were aware that they were being charged per mile – and they were aware of the miles that they drove – they drove less.

But one of the elements that came out of the first pilot study was that people were a little uncomfortable with monitoring where they went. It’s ironic that people are self-conscious about that, because with a smartphone, The Man knows where they are. These are people who are tweeting and posting pictures. And we are transforming automobiles into computers on wheels that are keeping track of this stuff anyway.

It’s ironic that women who wear short dresses are self-conscious about being long-lens observed by masturbating perverts. Because those women are tweeting and posting pictures, and they’re standing beneath the Global Hawks anyway. Remember that: if your neighbor has the nerve to Tweet his location once in a while, he’s asking for it. “It” in this case being government surveillance. And you are too, because you’re part of the “people” who like to Tweet.

(Clip NSFW for language)

Let’s hear more about what they did to calm the fears of “you people”:

we gave people a choice, because we really don’t care where they go. We care how far they go. So people could choose – they could do it with an app for a smartphone, they could use an on-board navigation system. They could do it the old-fashioned way when they go for an annual inspection and just have an odometer reading. Or you could pay a big fat, flat fee.

Well, there you go. It’s not exactly decent — imagine a hotel offering discounts for people who would allow cameras in the room — but it allows people to pay extra for privacy after a fashion. Let’s hear more about what we’re going to do to keep going in that direction.

According to GM and Verizon, the technology is there to make this transition. It could be done in months. They’re ready to go. The public’s not yet ready to go.

What transition is this? The transition where you start monitoring everybody’s movements despite what you just said about Oregon’s program? Also, notice that he asked “GM” and “Verizon”. That’s what happens when you bail out one industry and free another from anything that looks like the post-AT&T shackles put there by wiser men: you get toady-corps.

So we need to have a fuel tax increase to be able to have a robust six-year reauthorization, and we need another year or two or three of experimenting, raising the comfort level, giving people choices.

So we’re going to penalize the people who paid to reduce their consumption, as well as everyone else, and then we’re going to start selling the idea of submitting to monitoring. But wait, there’s more, because this guy literally cannot stop himself from frothing at the mouth at the possibilities.

The other thing that is so powerful about the VMT technology

And look: it has a name.

is that we’ll

Not “we’d”, which means “we could”. “We’ll”, which means “we will”.

be able to help drivers do a lot more than just conveniently pay for their road use. The same technological platform will enable people to get real-time traffic information. The seamless payment that’s debited to an account to pay for road use could also be used to pay for a transit ticket, or an Amtrak ticket, or an application they can use to pay for parking.

It’d be an integrated system. It’s very likely that this would be an on-board navigation system. The car companies are salivating at the prospect of doing this. There are people who would pay to be a part of it.

And there are people who will pay to have a woman squat over them and piss into their mouth. I know there are people like this because I’ve met multiple women who pay their rent doing it. But if you try to piss into my mouth then, as one of my favorite writers would say, you better come at me strong because I will take you down.

And now, at long last, we arrive at the Wagnerian moment where this guy just lets his freak flag fly and metaphorically ejaculates all over the face of the kneeling American motorist:

If all we did was set this up to collect the road fee, that’s actually a more expensive way to collect the fee. The gas tax is actually a very inexpensive tax to collect. But if we are able to have a platform that does all these other things, to share the costs, and give people a richer transportation experience, I think people will voluntarily make that transition.

We’re missing all the air quotes, I think, let’s put them back in:

I “think” people will “voluntarily” make that “transition”

When you read “voluntarily” in modern wonk-speak, you can take that to mean “Any amount of resistance short of facing down the Bureau of Land Management with the local redneck militia,” and that’s what it means here as well. The motorists of America will be given a single option: GPS-based usage tracking tied to a central payment account that will also be debited for parking and traffic tickets. It’s perfectly easy to imagine a speed camera just sitting by the site of the road dinging every motorist who goes by at 1mph over the limit a nice, round five hundred bucks. And why not?

Naturally, the same government that manages to lose all the incriminating IRS emails will keep solid-gold-permanent records of your travels until the end of time. If they do it with the justly-reviled public-private partnership, those records will be sold to Equifax and your insurance company as well. With your travel and your Carnivore records, the government knows exactly who and what you are. In real time, they’ll be able to understand your entire life. Imagine the day when driving to an oncology clinic results in a sit-down with your company’s HR representative to discuss your future with the company. Or the day when your employer can simply buy a list of your whereabouts sorted to its particular interest. Or the day when parking your car outside a gun store every Sunday and walking across the street for ice cream results in the ATF visiting your house to discuss your gun-nut tendencies. Or the day when driving through known drug-sales areas results in a SWAT team tossing a flashbang into your child’s crib.

“Oh, Jack, you teatard anarchist commie libertarian,” you’re sighing. “How else are they supposed to address the Highway Fund problem?” Well, I would suggest that destroying the last vestiges of privacy and liberty in this country are not any less meaningful than keeping up the pace of road construction. I would also suggest that it’s not my job to come up with ideas as to how the government can easily accomplish its goals without trampling its citizens underfoot. But since you asked, I’ll come up with one: A ten percent tariff on cheap goods imported from China would add 50% to the existing Highway Fund tax level, enough to address all concerns for the foreseeable future.

The amateur and professional economists on TTAC will no doubt speak at length about how this would disturb the economy. Well, the economy’s disturbed already, ain’t you noticed. And the United States Government has the iron-clad Constitutional authority to levy a tariff. Lastly, if you value the nebulous business interests that are served by Chinese trade over the actual freedom of actual American citizens, you’ve swallowed a lot of Kool-Aid from your one-percenter superiors.

Alternately, the gas tax could simply be doubled. It would be frustrating, and offensive, and it would place a further hardship on people who are already under the heel of transport costs, but it would be honest. And if it causes the entire country to switch to gasoline-free transportation, freeing us from bondage to the Middle East and the indignities of commodities traders? Well, that’s a nice problem for a country, or a scorpion, to have, isn’t it?

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LaHood Calls For VMT, New Taxes To Raise Funds For Infrastructure, As Gas Tax Runs Dry Wed, 26 Jun 2013 18:21:08 +0000

Credit our sorely missed EIC/Editor Emeritus Ed Niedermeyer for being well ahead of the curve. Back in 2011, Ed told me about how the rise of fuel efficient vehicles would create a revenue shortfall for the federal Highway Trust Fund, and that would lead the government to look at implementing all sorts of unpleasant things like a Vehicle Miles Traveled tax. Guess what Ray LaHood is proposing? You guessed it.

This isn’t the first time LaHood has proposed a VMT either. Back in 2009, he floated the idea as an alternative to raising the gas tax, which provides funding for the Highway Trust Fund, which is used to help maintain America’s roads. Now, LaHood is apparently telling the public that it’s in their interest to push the idea, according to The Detroit News

“Eventually people in the communities are going to persuade their members of Congress: We’re willing to raise taxes, we’re willing to pay tolls, we’re willing to go to vehicle miles traveled because we want better roads, better bridges,” LaHood said.

The big problem is that as Americans drive more fuel efficient vehicles, there is an increasingly large funding shortfall. There hasn’t been a raise in the gas tax since 1993, and Congress has spent $18.8 billion alone just to cover the shortfall for 2013-2014.

Last year, Congressional Budget Office estimated that to meet future highway needs between 2012 and 2022, the trust fund would need another $110 billion in funding. GAO says Congress could either hike gas taxes to 31.6 to 46.6 cents a gallon to fix the roads, or impose a 0.9-cent to 2.2-cent per mile tax on all travel.

The idea of a VMT, especially one tracked by GPS, is one that leaves civil libertarians in a cold sweat at night. Sources in DC tell us that a VMT essentially declared it a non-starter, not just for civil liberties reasons, but that the ROI would not be enough to justify implementing it. Nevertheless, a GAO report essentially endorsed a VMT scheme that could use GPS or other wireless transponders or prepaid “miles” indicated by a sticker on a vehicle’s windshield. Given how much the idea of the automobile is tied into the notion of personal liberty and freedom of movement, it’s hard to imagine this being acceptable to a vast swath of the American public. But something’s gotta give.

As Niedermeyer’s original report states, an increase in the gas tax (which occurred regularly from 1956-1993) is an inevitably, and the most sensible option as well. Though it would cause a hit to people’s pocketbooks, it would be the least intrusive option from a personal freedom standpoint, not to mention it would provide the requisite funding to keep America rolling.

Another side effect of a gas tax hike would be the increasing redundancy of CAFE. Rather than incentivizing auto makers to build hybrids, plug-ins, small displacement engines and increasing numbers of crossovers and trucks (to get around various CAFE loop holes), a gas tax hike would incentivize more fuel-efficient vehicles, no matter what propulsion system they used. Even Bob Lutz is on board with said logic

You either continue with inexpensive motor fuels and have to find other ways to incentivize the customer to buy hybrids and electric vehicles, such as the government credits. Or the other alternative is a gradual increase in the federal fuel tax of 25 cents a year, which in my estimation would have the benefit of giving automobile companies a planning base, and giving families that own vehicles a planning base. Every time gas prices go back down, everybody starts buying big stuff again. Gas prices go up a buck, the big stuff is unsellable and everyone wants small cars. Go figure. It’s like the collective memory is about three weeks long. We can’t run a business that way.

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Oregon Considers Per-Mile Tax On Fuel-Efficient Vehicles Fri, 04 Jan 2013 15:51:38 +0000

“Everybody uses the road and if some pay and some don’t then that’s an unfair situation that’s got to be resolved,” said Jim Whitty, manager of the Oregon Department of Transportation’s Office of Innovative Partnerships and Alternative Funding.

Ah, yes. As with any number of current governmental activities, the rationale for per-mile taxation will be fairness.

With the recent American election safely delivered into the appropriate hands, there’s no longer any need to sugar-coat the facts of life in the United States, is there? So let’s not. The unemployment rate is dipping because many people have simply given up and have either stopped looking for work or have dropped off the five-year cliff beyond which the Bureau of Labor no longer considers people unemployed – as if being unable to find a job for five years and one day was somehow equivalent to swanning one’s way off to Sun City, AZ. Meanwhile, we’re reassured that the middle class hasn’t disappeared — it just looks like the lower class now.

This modern life, this grey parade of single mothers and hopeless, underemployed men listlessly piloting the oldest automotive fleet in the country’s history between 29-hour-a-week “part-time” jobs, dismal food, and lonely evenings lit only by the constant flickering of the Internet as the one-percenters and rich kids of Instagram breeze past in an ever more obscene panoply of tasteless, pumped-up hyper-SUVs and bluff-faced, BMW-based Rolls-Royces. It’s not just bad for morale. It’s bad for taxes. And if some of the nation’s proles have the nerve to swing a loan for a more fuel-efficient car in the hopes of simultaneously preserving scarce resources and making a long-term positive economic impact in their own lives… well, something will have to be done.

The Statesman-Journal reports that Oregon has started a pilot program to study the implementation of a per-mile travel charge. This was apparently done in response to stricter CAFE standards and concerns that a smaller fleet of more fuel-efficient vehicles would impact gas taxes, which are already declining as more and more people just stay home.

Under the pilot, about 50 participants in Oregon paid 1.56 cents per mile and received a credit for the gas tax they paid at the pump. Participants, which mainly included transportation officials and lawmakers, chose from five plans with different ways to track miles driven and pay their bill.

They could report miles driven using a smartphone application, a geographic positioning system device or a reporting device without GPS.

Participants could also pay a flat annual charge or opt out of using a gadget in the vehicle to record miles.

The existing state gas tax is thirty cents per gallon, so this program would effectively return revenues to the days when the notoriously thirsty Ford Explorer was simultaneously doing 400,000 units or more a year and punishing the buyer of each one with real-world fuel mileage in the 15-mpg range. If you’re wearing a tinfoil hat right now, you’ve no doubt considered a likely implementation scenario where the flat fee will be based on a very high annual mileage and payable in a high-three-figure lump sum, while the privacy-eroding GPS-tracking device will be easy to use and the most affordable choice.

Insofar as this program deliberately encourages people to hold on to older, less fuel-efficient vehicles, the Obama administration will surely have an opinion on Oregon’s antics. The state’s famously liberal urban residents might also have a strong opinion about a program that seems targeted at electric and plug-in vehicles. One question perhaps not covered in the pilot program is this: If a young man lets a pair of valets put two hundred miles on his father’s vintage Ferrari, will running it in reverse on a pair of jackstands result in a tax refund?

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Quote Of The Day: Who Wants To See Gas Under $2 Per Gallon? Edition Wed, 17 Aug 2011 21:46:02 +0000

Who’s ready for some politics? With the presidential election still over 14 months away, recent Iowa straw poll winner Michelle Bachmann is upping the campaign promise ante by telling a Greenville, SC crowd

The day that the president became president gasoline was $1.79 a gallon. Look at what it is today. Under President Bachmann, you will see gasoline come down below $2 a gallon again. That will happen.

Without even taking a side in the muck of presidential politics, it’s plain to see how ridiculous this statement is. As Politico helpfully notes:

Bachmann didn’t detail how she would cut the price of gasoline, which is tied to the global price of oil. [Emphasis added]

Personally, I think gas should probably be taxed to a point where Americans pay about what the rest of the world does, in order to pay for the externalities of oil consumption. Most auto execs agree, arguing that America’s artificially low gas prices play hell with product planning. But even (or is that especially) if you’re a hard-core anti-tax free-market fundamentalist, Bachmann’s statement should be treated with scorn. After all, markets, not presidents, should be setting oil prices. But what’s principle (or even good practice) when compared to the need for political pandering?

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The Tragedy Of The Gas Tax Sat, 25 Jun 2011 15:42:51 +0000

General Motors CEO Dan Akerson set off something of a firestorm a few weeks ago, when he said, in response to a question about forthcoming CAFE increases:

You know what I’d rather have them do — this will make my Republican friends puke — as gas is going to go down here now, we ought to just slap a 50-cent or a dollar tax on a gallon of gas.

Predictably, populists and economic alarmists of all stripes took great umbrage at Akerson’s candor, questioning his leadership of GM as well as his perspective on the shaky US economy. But Akerson is not alone in his support of some form of gas-tax increase. Bob Lutz and  Tom Friedman (an odd couple right there, if ever there was one) agree with him. Edmunds CEO Jeremy Anwyl defended Akerson and even suggested a $2/gallon tax earlier this year. Bill Ford and  AutoNation’s Mike Jackson are of the same mind as now-retired Republican Senator George Voinovich on the issue. And yet, inside the Beltway, the subject tends to draw a chuckle and a roll of the eyes. Everyone wants it, but nobody wants it.

Since the term “oil addiction” has been used to death, let’s look to an (arguably) less demeaning metaphor: vegetables. Your mother probably didn’t force you to take an honest personal inventory when she made you eat some dreaded brussel sprout or another (which is why the addiction metaphor seems better), but she would have had you not been slave to infantile instinct. So now, with our fully developed faculties, let’s consider what happens if you don’t eat your vegetables.

In the most basic sense, not increasing the gas tax is bad for America’s physical body. Our roads, which circulate the lifeblood of commerce (OK, enough with the metaphor), are literally crumbling. Again, a phrase we may have become desensitized to, but literally true. Car and Driver has a good look at the problem of America’s infrastructure woes and their link to the gas tax, the Highway Trust Fund.

The HTF is a rare beast in the political world. Usually, federal tax money goes into the general fund, where legislators first pass an authorization bill, giving guidelines about how the money can be spent, then a separate appropriations bill actually putting the money into things like buying fighter jets or paying the National Institutes of Health’s electric bill. The HTF’s authorization guarantees that all federal gas-tax revenue will only be put there. Whenever a new transportation spending bill is passed, called a reauthorization, there are slight tweaks to the HTF and how it is spent, but in general it is considered sacrosanct.

Once in the HTF, interstate money is divided according to complex formulas that take into account things such as lane-miles of road, the number of  licensed drivers, ­priority programs for things like bridge replacements, and equity provisions to ensure that every state gets a minimum (currently guaranteed at 92 percent) of their contribution back. State transportation departments, which plan, build, and maintain the interstates, decide what they want to do and then pay for it; the federal share for interstate projects is 90 percent, 80 percent if no high-occupancy lanes are built.

Now, the HTF is running out of money….To match the rate of inflation and have the same value that the 18.4-cent tax did in 1993, the gas tax  would have to be increased to 28 cents per gallon.

Safe public roads are a government outlay that all but the most extreme “Atlas Shrugged”-thumpers can get behind, especially in the wake of a rush-hour bridge collapse like the 2007 Minneapolis I-35 bridge collapse. And yet the tax that pays for our interstates hasn’t even kept up with inflation. Increasing the price of gas may hurt Americans’ mobility in the short term, but not having an interstate system is the more dire long-term alternative.

Another downside to undertaxed gasoline, which explains the broad industry support for a gas tax hike, is that America’s cheap gas makes life hell for automotive product planners. Though this might actually be good for TTAC, as it would keep us well-stocked with stories of inventory issues and mis-timed products, we’re not that selfish. Recent history teaches us that the rate of increase or decrease in the price of gas, rather than the price itself, drives the market to the extremes of high and low fuel efficiency (as evidenced by he fact that last month’s hybrid sales fell despite gas prices hitting their 2008 price levels). Industry planners would rather see the price of gasoline taxed to a state to create sustainably steady price increases, eliminating some of the speculative swings in pricing, than to plan for lower efficiency and higher profits only to be caught flat-footed by a price shock. Also, bringing US gas prices into line with the rest of the world will help US market-dependent manufacturers develop truly global products. Finally, a gas tax increase would eliminate the need for the complex, loophole-ridden CAFE regime, which industry lobbyists say “only about six people in the US actually understand.” Lutz explains:

You either continue with inexpensive motor fuels and have to find other ways to incentivize the customer to buy hybrids and electric vehicles, such as the government credits. Or the other alternative is a gradual increase in the federal fuel tax of 25 cents a year, which in my estimation would have the benefit of giving automobile companies a planning base, and giving families that own vehicles a planning base. Every time gas prices go back down, everybody starts buying big stuff again. Gas prices go up a buck, the big stuff is unsellable and everyone wants small cars. Go figure. It’s like the collective memory is about three weeks long. We can’t run a business that way.

And then there’s the issue of “externalities,” or the unborn costs of cheap gasoline. One commonly-cited “hidden cost” of cheap gasoline is the US’s huge overseas military presence. Though the link between America’s military adventures and our low price of gas isn’t always obvious, our intervention in Libya shows how expensive interventions are often undertaken out of fear of a gas price shock. Since the cost of military action isn’t built into the price of gas, this amounts to a hidden cost. Furthermore, the military’s intensive use of gasoline has a multiplying effect on those costs, forcing Pentagon planners to seek ever-greater efficiency simply to maintain existing overseas deployments.

Another there are plenty of other externalities to cheap gasoline. As Akerson points out, CAFE puts the burden of efficiency on auto manufacturers, potentially costing manufacturing jobs, at a time when the oil industry has been immensely profitable. Furthermore, as the video above shows, pollution is another hidden cost of cheap gas. Like military interventions, the cost of health problems caused by pollution is largely born by taxpayers… another “hidden cost” that some estimates place at over a trillion dollars per year.

But the final externality is one that should stop the populist resistance to a gas tax in its tracks: if we don’t pay for our gas with more money, we will do so with our privacy. Going back to  the Highway Trust Fund, we find that the only alternative to an increase in the tax itself is the “Vehicle Miles Traveled” tax, a scheme that would require the government to track every single vehicle in the United States and tax it based on the miles traveled. Though in many ways a more fair system than a gas tax alone (as it apportions costs based on use of the infrastructure, without filtering it through the efficiency level of each individual car, the VMT tax scheme is an Orwellian nightmare waiting to happen. Though privacy is not at the height of its popularity at the moment, those who oppose any increase in the gas tax would do well to consider the implications of this alternative (Who does the data belong to? Will law enforcement get access? Will others be able to track you by piggy-backing onto the system?). Especially since no other alternative is even being seriously considered.

Ultimately, the tragic truth is that there may be no way to prevent this final “alternative” to the gas tax for the simple reason that, as efficiency improves towards zero gasoline use vehicles, gas tax revenue will eventually fall away to nothing. But that horizon could be pushed out twenty years if we recognize that not even indexing the gas tax to inflation is unsustainable and if we create a long term “glidepath” of predictably-increasing gas taxes. In this scenario, our highways could be maintained, some of the externalities of gasoline use could be mitigated, and the auto industry would have the predictability to plan products that use the remaining gasoline as efficiently as possible. Moreover, the US would not be taking on any special burden in the global picture, but would simply be joining the rest of the world in paying a more realistic price for our gasoline.

Any one of these arguments could be quibbled with, but at the end of the day, opposition to any increase in the gas tax can only be justified on the fear of short-term consequences that pale in comparison to the longer-term alternatives. Like the auto bailout, sacrificing long-term principles based on short-term fears betrays a lack of faith in America’s ability to innovate its way out of challenges. What’s the principle at stake here? Market function, for one thing, which is fundamentally perverted by willfully hidden externalities. How about the historically unprecedented mobility offered by our interstate system, not to mention the ability to enjoy that mobility without government surveillance? Global equity in an increasingly multipolar world, and environmental justice are other fine principles, if you’re into that kind of thing. Oh, and did we mention America’s swamped fiscal situation that is the backdrop to all of this?

Sadly, the reason a gas tax increase hasn’t happened isn’t because people don’t understand these issues. This isn’t a problem that can be solved by op-eds like this one. Taking on this issue will require a fundamental shift in how the gas tax and gas prices more generally are seen inside the beltway, and based on President Obama’s recent decision to release strategic oil reserves, that leadership is as AWOL as ever. And with an election looming, we’re more likely to see a gas tax holiday (as we did during the last presidential election) than any proposal for an increase in gas taxes. So, what’s the solution? Instead of just verbally supporting a gas tax increase, corporate leaders like Akerson who claim the policy is in their best interests need to stop throwing up their hands at the political challenge and start putting their money where their mouth is. The ideas behind a gas tax increase are so strong, even a moderately well-funded political action committee would at least be able to embarrass a few of the craven politicians who oppose this common-sense policy. You have to start somewhere…


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Senate Proposal Would Suspend Federal Gas Tax Fri, 20 May 2011 13:47:59 +0000

The average price of regular unleaded gasoline was $3.96 this week, an increase of 38 percent over the same time last year. US Senator Rand Paul (R-Kentucky) on Tuesday proposed to temporarily reduce that cost by 18.4 cent cents by suspending the federal gas tax. Under the freshman lawmaker’s plan, the highway trust fund would be replenished by reducing payments made to foreign governments.

“Let’s have a gas tax holiday,” Paul said in a floor speech. “Let’s take the money from foreign aid and let’s give it back to the American people who worked hard to earn it…. That would help people, that would lower the price of gasoline and that would be a stimulus to the economy.”

A four-month suspension would cost about $10 billion, about as much as the US spends on monetary assistance overseas. Paul blasted Senate Democrats for attempting to impose financial penalties on the five largest petroleum firms, which earned record profits last year, as a means of reducing the price at the pump.

“Their solution is to raise taxes on oil companies,” Paul said. “Do you know what taxes are? Taxes are simply a cost. If you run a business and I raise your costs, you’ll raise your prices. So let’s see, prices are too high, so we’re going to raise the costs which will raise the prices further. It makes absolutely no sense.”

Last year, ExxonMobil’s net income of $30.5 billion was just 8.2 percent of its $370 billion in sales, including all of the firms business ventures beyond oil. Many other industries enjoy much higher profit margins, such as beverage companies, computer equipment suppliers, pharmaceutical companies and the manufacturing sector.

Senator Tom Coburn (R-Oklahoma) argued that members of Congress shared the bulk of the blame for the high price of gasoline by running deficits of $1.5 trillion a year. He suggested fiscal restraint as a cost reduction measure.

“Do my colleagues know why oil is expensive today?” Coburn said. “It is because the dollar is on its back and oil is priced in dollars. If we want the price of oil to go down, as it has this week and the tail end of last week, we want the value of the dollar to go up, because the world trades oil in dollars. Why is the dollar down? The dollar is down because an incompetent Congress continues to spend money we don’t have on things we don’t absolutely need. If we want the dollar to improve in value, what we have to do is hold the Congress accountable for doing what they were elected to do, which is live within our means.”


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Ask The Best And Brightest: Gas Tax? Fri, 12 Nov 2010 19:15:17 +0000

With the federal deficit balooning out of control, President Obama’s National Commission on Fiscal Responsibility and Reform has publicized its preliminary proposals, and goodness are there a lot of them. But only one of the commission’s proposals gets to the heart of this nation’s automotive future: a proposal to increase America’s gas tax. Federal fuel taxes currently stand at 18.4 cents a gallon for gasoline and 24.4 cents for diesel fuel, but the commission has proposed a 15 cent per gallon increase, to take effect starting in 2013.

According to CNN

Gas taxes would rise by one cent every three months beginning in January 2013, until the 15 cent increase has been reached… The proposal calls for the funds to be “dedicated toward fully funding the transportation trust funds and therefore eliminating the need for further general fund bailouts.”

It’s not immediately clear how much money this tax increase might raise, but the overall proposal would cut as much as $4 trillion from the federal debt. And with transportation trust funds draining the general fund, a gas tax hike has been tossed around for some time. And as unpopular as tax increases are, better a gas tax than Transportation Secretary Ray LaHoods preferred alternative: a pay-per-mile scheme that would require GPS tracking of every vehicle in America. Besides, a gas tax increase will make those ramped-up CAFE standards far less onerous by shifting market demand towards more-efficient vehicles. Congress-watchers reckon that a gas tax hike is unlikely to happen in the recently-elected, more-conservative congress. Down the road, though, it’s hard to see this proposal not coming back up at some point.

Would you support a gas tax hike? Would a 15 cent increase in the price of gas have a real impact on your lifestyle? Would it change your car-buying decisions? Or should the gas tax be a political sacred cow?

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Will CAFE Cause A Small Car Glut? Thu, 10 Dec 2009 19:15:40 +0000 The movement to nowhere?CSM Worldwide seems to think so, telling Automotive News [sub] that new compacts from Ford and Chevrolet are being pushed into the market to comply with increasing fuel-efficiency and CO2 emission standards. If gas prices stay steady, CSM’s VP for Forecasting, Michael Robinet says “extreme pressure to channel smaller vehicles in the market due to CAFE and emissions standards will raise incentives and lower profitability.” “It is very possible that U.S. automakers will not achieve their objectives of selling small cars at a profit,” adds CSM CEO Craig Cather. The crux of the argument is that CAFE ramp-ups to 35.5 MPG by 2016 create incentives for automakers to produce small cars without corresponding consumer demand. Luckily there’s a planned gas tax hike for that.

CSM admits that either an oil shock or a gas tax hike would increase demand for small cars, effectively nullifying their argument. And given the DOT’s rhetoric recently, that seems like a very plausible scenario… after all, even the most virulent anti-tax types would sign up for an indexed gas tax given that the alternative could be a pay-per-mile GPS tracking scheme.

But there’s more to CSM’s analysis than politics. AN [sub] explains:

Increasing competition in the subcompact and compact segments, which have long been dominated by Asian automakers, may also hamper Detroit automakers’ goal of making money on selling small cars, CSM said.

In short, CSM isn’t actually worried about a small car glut, it’s simply collecting excuses for the seemingly inevitable failure of Detroit’s compact offensive. After all, CAFE standards apply to the “Asian automakers” just as much as they apply to Ford and GM. The real problem is that the Detroit has a hard enough time getting consumers to consider its traditionally strong products like large cars and SUV/CUVs, and will be even harder pressed to drum up interest in its new compact offensive. The steady growth in the small-car segments that even CSM admits are occurring will simply go to the manufacturers who have maintained a stronger presence in those segments.

Will Detroit face an uphill battle selling the compact cars that are filling its future-product pipelines? You betcha. Is it CAFE’s fault? Of course not. CSM’s analysis is, at best an argument for a gas tax hike. Given the government’s 61 percent “exposure” to GM (and its heavy investment in small cars like Cruze, Volt, Spark, and Aveo), such a hike seems all the more likely.

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Is A Gas Tax Hike Coming? Mon, 07 Dec 2009 20:18:26 +0000 Just stop talking about pay-per-mile! (

Ray LaHood seems to think so. He tells the Dallas-Fort Worth Star-Telegram:

The problem we have is, Congress wants to pass a very robust transportation bill in the neighborhood of $400 billion or $500 billion, and we know the highway trust fund is just deficient in its ability to fund those kinds of projects. The highway trust fund was substantial at one time but now with people driving less, and driving more fuel-efficient cars, it has become deficient. To index the federal fuel tax, that’s something Congress is going to have to decide. As we get into the reauthorization bill, the debate will be how we fund all the things we want to do. You can raise a lot of money with tolling. Another means of funding can be the infrastructural bank. You can sell bonds and set aside money for big projects, multibillion-dollar projects. Another way is (charging a fee to motorists for) vehicle miles traveled. The idea of indexing the taxes that are collected at the gas pump is something I believe Congress will debate. When the gas tax was raised in 1992 or 1993, in the Clinton administration, there was a big debate whether it should be indexed. At that time, they thought there’d be a sufficient amount of money collected. Now we know that isn’t the case. That is one way to keep up with the decline in driving, and more fuel-efficient cars.

LaHood stopped short of explicitly endorsing a gas tax hike, but he said it’s an issue that congress will have to take the lead on. And if it comes to a debate, let’s hope that indexing the gas tax for annual increases wins out. After all, LaHood has made it clear that he favors a pay-per-mile scheme which would require placing GPS tracking devices in all vehicles. Moreover, steady increases in the gas tax would accelerate consumer demand for fuel-efficient vehicles, actually helping automakers reduce their fleet average fuel economy numbers in a more organic fashion that CAFE mandates. The idea of indexing fuel taxes is said to be gaining support among transport policy analysts. In light of the threat posed by pay-per-mile, we’ll call that a good thing.

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