Wednesday, January 7, 2009

Federal Gas Tax Increase Quite Possible

We've seen the headlines declaring the 2009 deficit to exceed $1 trillion, and with the massive economic stimulus bill coming, we appear ready to add to it. Although Obama claims the bill will have no pork attached to it, but I'm a little skeptical. They will need to come up with new ways to increase government revenue, and here's one possible one:

With fuel prices low due to a economic slowdown and demand destruction, those is Washington might seize the opportunity to raise the federal gas tax...

A government commission has called for a 50 percent increase in gasoline and diesel fuel taxes, which could mean an extra 10 cents per gallon for drivers.

Congresswoman Corrine Brown told Channel 4 the government needs a comprehensive plan to solve the problem -- a plan that could include vehicle registration fees or toll roads and other local taxing options.

Brown said it's a combination that has worked overseas.

"There is no quick fix, but we don't have to reinvent the wheel, we can look at Europe, and it works, and we need to figure out how to do that here," Brown said.

Ah yes, the European model. It makes sense in theory to raise gas taxes so people only buy fuel who absolutely need it, and the rest can rely on public transportation. But it just doesn't work for a major part of America geographically.

If the tax increase went directly to alternative fuel research and production, it might be feasible, but it most likely to go "other areas."

Now is the time to sell this, and they know it. Oil is a resource with dwindling supply, and as soon as the major world economies stabilize, gas prices are going to rise. And selling an increase on the gas tax won't fly with $4/gallon gas. Remember this summer when there were calls for a federal gas tax holiday? What a difference six months makes.

Link: Commision Proposes 50% Gas Tax Hike

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