DISQUS

Pete Duffy · 2 years ago

Our Washington State gasoline taxes are spent on highways, bridges, and ferries, but not on city streets (where most of the gasoline is used.) It would be political suicide for a city council member to suggest a local gasoline tax for street upkeep, or any other purpose. Of course such a local gas tax would just drive people to the suburbs to purchase gasoline. If I had a national voice, I would propose a federal gasoline tax that would be rebated to the cities and counties where it was collected, for the purpose of road construction, maintenance, and traffic safety? This kind of tax could bring the full cost of driving to the driving public.

James Britton · 2 years ago

Pete,

My project actually does examine federal gasoline taxes primarily. When I'm finished with the paper I plan to post it here. There are several ideas about how the tax would be implemented. But the general consensus seems to be introducing it on a periodic basis over several years. The current federal tax is a paltry (compared to Europe) 18.4 cents per gallon with each state imposing their own in addition to that. The average total tax is around 40 cents. Economist Greg Mankiw proposes, for example, $1.00 spread over 10 years i.e. 10 cents per year. One of the main questions in my paper is: What is the optimal gasoline tax needed to reduce demand?

There is also the proposal of reducing payroll taxes and offsetting that reduction with the increase of the federal gasoline tax. This would make the tax regressive, since poorer people tend to use less petroleum that the richer, and distribute the burden more fairly. The market will figure out greater efficiencies in oil usage, new technologies will be developed and our consumption will decrease.

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James Britton · 2 years ago

Thanks for visiting, I'm glad you like it.