Wise Tax Policy – Not!

I’ve been thinking lately about the gas tax – the one that both John McCain and Hillary Clinton want to waive during the summer when Americans (read: voters) hit the roads on vacation. It’s about 18 cents a gallon, and getting rid of it is something that would be immediately noticeable to anyone (read: voters).

Most people think of taxes as a way for the government to generate revenue, which they are. But taxes have another purpose, to steer behavior. The state imposes fees on things they want to discourage. Case in point: the well-publicized congestion pricing plan in New York, which may or may not be completely dead. To limit traffic, the city proposed a fee for people entering Manhattan by car. If they really want to drive in New York, they’ll be willing to pay for the privilege, or so the theory goes. And if they don’t want to pay the fee, they’ll take public transportation, which is exactly what the city wanted.

So apply that logic to the gas tax. If we really want to encourage people to be mindful about their driving habits, if we really want to encourage the auto industry to produce fuel-efficient vehicles, then we shouldn’t be getting rid of the gas tax, we should be RAISING it! Making people vote with their wallets will make them think twice about what’s really important, but making gas cheaper will just make people drive more.

And what kind of message does it send to waive the tax? I guess that people running for president don’t really care about the environment nearly as much as they care about making people (read: voters) happy. At least in the short term.

Because in the long term, it seems pretty clear that expensive oil will be with us for a while, and we need some really smart alternative energy ideas to make sure that gas and other forms of power remain reasonably affordable. And lowering taxes on gas – that’s not a smart idea.