(Opinion): Could be worse things for our world than raising gas tax

by George S. Howard

The latest television ads from President Bush end with a mocking charge that presumptive Democratic presidential nominee Sen. John Kerry voted in favor of a 50-cent tax on gasoline. Is Kerry actually for a gasoline tax?p. p. p. The enormity of the 2004 federal budget deficit — $478 billion, according to the latest figures from the Congressional Budget Office — means that the United States must collect $50 million per day indefinitely just to service the 2004 addition to our national debt (assuming a 4 percent debt service).p. Despite our understandable reluctance, we will need to raise taxes sooner or later. However, not all taxes work equally well, as whatever is taxed — liquor, cigarettes, income — is thereby suppressed. Sin taxes are popular because they decrease unwanted behaviors while they generate revenue.p. A gas tax is an appealing option because Americans can reduce reliance on Mideast oil supplies — since price increases reduce demand for the product — while the government generates needed revenue.p. But a gas tax is even more effective because every increase in the price of gasoline makes the clean and efficient technologies of the future — such as hybrid electric, electric and fuel cell autos — more attractive alternatives. It isn’t surprising that the only hybrid electric vehicles on the market, the Toyota Prius and Honda Civic, were developed in Japan, where the price of gasoline has been more than $3 per gallon for many years. American automobile companies are in danger of losing the fight for good manufacturing jobs to the Japanese as long as our hybrids must compete with low-priced gasoline. I believe we owe it to American auto companies to tax gasoline for them to stand a chance in the competition for the efficient autos of the future.p. By artificially forcing down the price of gasoline for many years through tax breaks to oil companies, such as the Oil Depletion Allowance, our government created an environment in which inefficient autos can flourish because there was little reward for efficiency. In October 2000, the economist Hal Varian noted that in Britain, where gasoline costs $4.35 per gallon, more than $3.30 went to taxes. By comparison, in the United States, where gasoline is about $1.70 per gallon, only 38 cents went to taxes.p. What would happen if our government charged only half what the British charge in taxes ($1.16 per gallon)? Many things: Obviously, the amount of gasoline used would drop considerably. Since we are the world’s largest importer of crude oil, the price of crude oil would drop. Importing less crude oil at a cheaper price would drop our balance of trade deficit considerably. The resulting gasoline climate would encourage American auto manufacturers to produce more efficient autos, such as hybrids. And, buying American hybrids instead of similar Japanese vehicles would further improve our balance of trade.p. Vice President Dick Cheney claims that conservation is a private virtue, and he downplays government’s role in helping Americans become more virtuous. An equally august conservative sees things quite differently. George Will, in his book _ Statecraft as Soulcraft, _ claims that a legitimate function of government is to help people to become better citizens.p. By using less gasoline, we will generate less pollution and greenhouse gases. We will thereby become better citizens — not just of our country — but of the world. Environmental psychologists have found that few people will behave in a pro-environmental manner if societal structures — low-priced gas and the tax code, for example — push in the opposite direction. However, studies show that pro-environmental behavior becomes overwhelming when supported by societal structures.p. We will be forced to raise taxes sooner or later. I believe a hard-working gas tax would be the country’s best option for many reasons — not the least of which is it would help Americans become more environmentally friendly. If not, we might be forced to raise income tax rates — and thereby only stifle our incentive to earn money.p. A gasoline tax? Kerry could do worse.p. p. _George S. Howard is a professor of environmental psychology at the University of Notre Dame. _

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