The possibility of raising the federal gas tax, which is between 23c (Alaska) and 67c (California) is remote in these days when gas prices have risen in some places to $4/gallon.
So why raise it beyond that? You might think it akin to beating a man when he's down. But that's precisely what Lester brown of the Earth Policy Institute believes, in the policy paper somewhat naively entitled "An exciting new option." He thinks "tax shifting,"...reducing income taxes while increasing consumption taxes, is the way to go. While economists may think this is a great idea, perhaps the gas tax should not be accompanied by such a reduction, and the additonal revenues dedicated to improving mass transit and trains. We can dream.
An interesting statistic from the paper: The average U.S. gas tax of 47¢ per gallon,scarcely one tenth that in Europe, helps explain why more gasoline is used in the United States than in the next 20 countries
Gal Luft, executive director of the Institute for the Analysis of Global Security and co-chair of the Set America Free Coalition, in this article on our oil dependence last week in the Miami Herald, says that the real price of gas per gallon is more than double what one pays at the pump. It is over $11/gallon, when the "externalities" or side-effect costs of using gas in vehicles is included.
But the real economic impact of oil dependence is hidden to most Americans. Energy economist Milton Copulos (who passed away this month) calculated last year that the grand total of all external costs associated with foreign oil dependence -- including the cost of oil-related defense expenditures, amortized cost of supply disruptions, and lost economic activity and tax revenues -- stands at $825 billion per year.
To put the figure in perspective, this is equivalent to adding $8.35 to the price of a gallon of gasoline refined from Persian Gulf. The United States is essentially facing a terrible choice between a financial meltdown and a metastasizing sovereignty loss, political decline and eventual enslavement to OPEC and its whims.