Thursday, May 03, 2007

Time to Propose Higher Gas Taxes?

It seems that the Congress may be starting to move toward setting higher Corporate Average Fuel Economy (CAFE) standards in the US:
Strict fuel economy rules to be argued

Michigan's two U.S. senators will defend the U.S. auto industry against a rising tide of support for tougher fuel economy rules in a Senate committee hearing today, warning that such proposals threaten jobs.

The hearing in front of the Senate's Science, Commerce and Transportation Committee will consider four competing proposals aimed at forcing automakers to improve the mileage of new cars and trucks, with targets as high as 40 m.p.g. for cars by 2017. The committee may pass one such bill as soon as next Tuesday, making it the first fuel economy proposal to hit the floor of the House or Senate in the new Democratic-controlled Congress.
Many economists - even economists who feel strongly that the government needs to take active steps to help reduce energy use in the US - are not fans of CAFE standards. But the alternative that most such economists would prefer is a higher tax on gasoline, which is generally seen as less politically palatable. Various different economists seem to agree that a good level of gasoline taxation in the US (i.e. the level of taxes that would properly account for gas consumption's social costs) would be in the neighborhood of $1 to $1.50 per gallon, compared to a national average of about 40 cents per gallon today (about half of which are federal taxes).

Interestingly, the Civil Society Institute has just published the results of a survey they took on attitudes toward gas consumption in the US. Most of the survey's results are not particularly interesting to me, since they revolve around how people might change their behavior if gas prices reach $x, and I think that people are not very good at accurately predicting their behavioral changes to such hypothetical situations. But part of the survey caught my eye. From the executive summary (pdf file):
Over half of Americans (54 percent) would support raising the taxes on gasoline sales if that revenue would be used for research into alternative fuels. This idea is more popular with women (58 percent) than it is with men (50 percent). The idea of earmarking a portion of existing federal income taxes for research into alternative fuels is a wildly popular idea among those age 18-24 (74 percent).
Could it be that American attitudes toward higher gas taxes are changing? This survey doesn't give any time trends, so it's hard to know, but these results indicate that there may be surprisingly (to me, anyway) strong support for higher gas taxes. Could the time for higher gas taxes have finally come?

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