Saturday, July 25, 2015

Gas Tax : Punishing the Heretics of the Green Movement

There is a gap between funding for the highways and roads and the revenue coming in for it. The gas tax hasn't been raised for 22 years and you are going to hear calls for raising it.[1][2]

End the Gas Tax

USA today calls for phasing out the gas tax because of the cost of bureaucracy. Anything government driven has this problem so this reason is moot.

Forbes calls for reform of the gas tax but gets the reasoning wrong. Forbes lays out the history of the gas tax and how funds in are tied to projects directly related to the road, however, in the 90's this relation was temporarily severed to pay for other things; this is blamed for the unpopularity of the tax and why reform is needed.

Bloomberg actually gets part of problem correct, ... fuel efficiency and less driving.

Government Created the Problem

CAFE standards demand better fuel efficiency in vehicles which means when the goals are met drivers buy less gas to go the same distance. So it stands to reason that less money is collected through taxes.

Fuel efficiency is nice but the government has no place dictating it; this is legislating physics which is a very arrogant thing for man to do.

The next problem is a double blow to the gas tax and funds for roads; the government's push for electric and hybrid vehicles.

Tax credits to buyers of the green vehicles is paid for by all tax payers. The first punch is these drivers don't use gas or only a little thus evading the gas tax and yet they still put wear and tear on the roads.

The double punch is the subsidy money could instead be put towards road construction and repair, but no. Instead we are going to continue to subsidize these vehicles and look to taxing the drivers that use gas more.

Last I checked only churches and non-profits were supposed to be tax exempt. (Yeah, the Volt lost money but that doesn't make it a non-profit organization.)

The subsidies don't go just to the people that buy the cars but companies within the pipeline that make the car or parts of it. There is an article that "debunks" Volt myths and fails on the government money myth. It frames the myth as "#5 It’s made of government bailout money." That is not the myth; the myth is "the Volt is a government subsidized car." In fact the debunking of the myth admits to the subsidies and blames Bush for the subsidies; whether this is a Bush subsidy or an Obama subsidy it is still a government subsidy. Supposedly the 2016 Volt will be profitable.

There's no telling how long these subsidies will continue. A subsidy is per model per model year and does not phase out till 200,000 units of it are sold. Even then the subsidy phases out to 50% after two quarters, 25% at four quarters, and no credit after six quarters after hitting the 200,000 mark. By then the car will be on to the next model year and a new set of subsidies.[1][2]

To be fair there was a discontinued subsidy. It was replaced by a new one.

What's the Solution?

End the gas tax, end the green car subsidies, and budget the roads like any other part of the government.

Ending the gas tax will make the cost of the transportation of goods cheaper thus making them more affordable. This can lead to an increase of consumption and leading to the need for more production. In the end there could be more tax revenue through increased income tax revenues; in addition this enriches the lives of the citizens.

Ending the subsidies will also correct the car and energy market to use what is truly economical choices. Also, it is immoral to make one person to pay for part of another person's desired purchase. Can you imagine if the government subsidized the purchase of yachts? Subsidizing the purchase of a car because of the type of motor it uses is no different.

Budget the roads like other parts of the budget. Make the importance of running shrimps on a treadmill compete with the importance of good roads. Hopefully we can expose wasteful projects by making them compete with critical projects.

Or we can raise the gas tax making products more expensive due to transportation costs while we give money to people who buy cars that do not contribute to the road fund.

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