A 290% increase in the gasoline tax would be good for consumers


One of the key issues before the Congress is raising the gasoline tax. That politicians, including GOP senators, would want a hike in the gas tax is unsurprising. The gasoline tax funds the Federal Highway Trust Fund, that piggy bank of under the counter pork and blatant crony capitalism that is beloved of Congress and lobbyists.


The incoming Republican leader of the Senate Transportation Committee said Sunday an increase is up for consideration, as “we have to look at all the options.”

“I don’t think we take anything off the table at this point,” [mc_name name=’Sen. John Thune (R-SD)’ chamber=’senate’ mcid=’T000250′ ] said on “Fox News Sunday.”

Prices at the pump are at the lowest point in years — the nationwide average has tumbled more than a dollar in the last year, reaching $2.20 on Monday.

That’s given drivers significant relief at the same time as the federal highway fundcontinues to face huge shortages. Thune said the fund is looking at “about a $100 billion shortfall.”

On top of that, the law behind the fund is set to expire in May.

And the nation’s infrastructure is in dire need of repair. The American Society of Civil Engineers rated the country’s roads and bridges a D+.

Some of his colleagues, led by Republican [mc_name name=’Sen. Bob Corker (R-TN)’ chamber=’senate’ mcid=’C001071′ ] and Democratic Senator Chris Murphy, have proposed an increase of 12 cents per gallon over the next two years, then linking increases to inflation.

Business leaders, including the Chamber of Commerce, have also called for an increase.


Never mind that the tax is heavily regressive. Never mind that the economy merely resisting the second flush from the Obama crapper. Never mind that the price of gasoline will inevitably rise again and the gasoline tax will not be reduced. The tax must be raised, and as an enviro-whacko named Jeffrey D. Sachs writes at Politico, consumers will actually be better off.

Twenty-two years ago, when the price of gas at the pump was $1 a gallon and a movie ticket was $4, Congress saw fit to set the gasoline tax at 18.4 cents a gallon. The idea was to ensure enough funds for the Federal Highway Trust Fund to keep our roads and bridges in good repair. Today, while almost all other prices have soared, the gas tax hasn’t budged, and the trust fund is depleted. With world oil prices crashing, we have a unique opportunity to raise the gas tax, replenish the trust fund, leverage private-sector financing and leave the U.S. consumer far better off than just a few weeks ago — all at the same time

How does this work? Because, just being a dumb-**** from southern Virginia and not a Harvard Ph.D., I’d always assumed the way that me, as a consumer, got better off  by reducing outlays on food, transportation, and housing, and thereby freeing up extra cash to invest in scare commodities like hookers and blow and good bourbon.


By raising the gasoline tax 35 cents a gallon — bringing the total tax to 53.4 cents per gallon — consumers would still keep three-fourths of the recent windfall savings, while the U.S. government would recoup around $50 billion per year, or $500 billion over a decade, enough to close the financing gap on the trust fund while also making a down payment on the huge arrears on maintenance of the federal transportation system.

I’m confused. You are increasing the gasoline tax by 290% but I’m still coming out ahead because the price of gasoline is down? And let’s not forget that the “arrears” on maintenance is a function of the Congress focusing on building stuff and not being required to budget for its upkeep. So how his building more new stuff, with no plan for its maintenance, going to help us out? No one seems to know.

But wait, as the man says, there’s more.

The public benefits from higher gasoline taxes could be much greater than $50 billion per year in investments in highways and mass transit. Many new transport projects will yield economic benefits in the form of increased values for private property along the improved transport corridors. These higher values can in turn be a boon to government revenues in the form of tolls on new or improved roads and increased tax collections on more valuable property. By yielding a flow of revenues, these projects can be financed by a mix of public grants and private loans. In this way, a new flow of $50 billion per year could be leveraged to support $100 billion or more in new infrastructure investments.

A small part of the increased federal revenues should also be used to seal the deal on climate change this December in Paris. The rich countries — including the United States, the European Union and Japan — have promised an incremental $100 billion of climate financing per year as of 2020 to help poor countries — including those fighting climate change in Africa, the Caribbean and Asia — adjust to the increasingly frequent and severe droughts, storms and floods hitting their economies, through no fault of their own. The money would also be used to help poorer countries make the transition to wind, solar and other renewable energy sources. The $100 billion will be a mix of grants and loans, with the U.S. fair-share contribution among the high-income countries coming to around $10 billion of grants per year. The increased tax on gasoline would be a natural place to find that extra revenue.


What this guy is proposing is a self-licking ice cream cone. As you see there is no inclination that maybe we’d be better off scaling back on building infrastructure or even demolishing some projects (street cars virtually anywhere and “high speed rail” come to mind) and ensuring that we have a capital fund that can repair the infrastructure that has a direct federal purpose. Maybe we’d be better off letting states fund anything that isn’t truly national or interstate. And just possibly we should  acknowledge that something that costs you money and doesn’t earn money really isn’t an investment, maybe it is a money sump.

Two things, however, are certain. First, the anemic recovery we have is being funded by the lower cost of gasoline. It is pumping money into the economy at an extraordinary rate. Second, taking money from the private sector to give to politicians to use to buy political favors is not a good use of money and it is not an investment.




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