Is it time to raise the gas tax?

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Back in 2008, when Barack Obama was running for President, he took a politically unpopular stand on the gas tax. Both John McCain and Hillary Clinton were calling for a gas-tax “holiday” to stimulate the economy. Obama took the side of most economists (not to mention our very own Justin Fox) in saying that a lower gas tax might play well at the polls but wasn’t actually smart economic policy.

Where is that principle now?

Boston Globe columnist Derrick Jackson points out that as Congressional debate around energy reform kicks into gear, the President is surprisingly quiet about the most obvious way to tackle excessive fossil fuel consumption: getting people to burn less gas in motor vehicles.  Jackson notes that sales of SUVs rose by 32% in May, compared to a year earlier, while sales of cars grew by just 16%. He writes:

If this is still the way that young and affluent Americans display how they’ve done well, and if this is what we call putting America back to work, then we’re in more trouble than we thought. The oil spill began in April, yet SUVs flew out of showrooms in May. Obama says that without a major change in energy policy we will “jeopardize our national security’’ and “smother our planet.’’ Yet, America still uses the SUV, with its overblown image of safety, as its security blanket, not worrying who or what the blanket smothers.

The oft-repeated absurdity is this: the federal gas tax hasn’t changed since 1993. It was 18.4 cents a gallon then, and it’s 18.4 cents a gallon now. Taking inflation out of the equation, the effective tax has gone down to 12.2 cents a gallon.

Environmental issues aside for a moment, that’s a huge problem considering that our nation’s roads (and bridges and tunnels) are falling apart. The Highway Trust Fund, which takes the gas tax and pays for infrastructure projects, is practically bankrupt. Even the U.S. Chamber of Commerce, not exactly a pro-tax group, is clamoring for an increase in the gas tax (a “user fee” to the Chamber’s way of thinking) since roads are so important to companies shipping goods and supplies around the country.

But back to the issue of how much fossil fuel we burn. Plenty of evidence points to the fact that when gas prices go up Americans buy more fuel-efficient cars. See, for example, the 1970s. Or this more-recent paper, which finds that a $1-a-gallon increase at the pump leads to a 20% jump in market share for the most fuel-efficient cars (those in the top quartile in terms of efficiency) and a 24% drop in market share for the least fuel-efficient (the bottom quartile).

So why aren’t more of our leaders, like the President, pushing the idea?

I’m guessing it has something to do with mid-term elections. Good policy is no match for the need to get re-elected. The AP reports that Congress probably won’t even take up reauthorization of the nation’s major highway and transit legislation (which needs a re-vote every five years), at least in part because of the fear of having to deal with the possibility of raising the gas tax. Now that’s some leadership in action.

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