Clarifying The Gas Tax Debate
The Tax Foundation writes in a news release yesterday that “(f)uel taxes have recently become a hot topic in the presidential campaign and in the media,” adding that “(e)veryone has an angle on this issue:”
“The purpose of the gas tax is simple: to raise revenue for building and maintaining roads and related infrastructure. This approach conforms to what economists call the "benefit principle" of taxation, which stipulates that consumers of government services should pay in proportion to the benefit they obtain from those services. It follows that the revenue raised from a tax that adheres to the benefit principle should be used solely to provide the good or service on which the tax is levied. Therefore, if gas taxes are paid by the individuals who benefit most from roads (drivers) and if the revenue is used solely for road building and maintenance, then the tax is a good one.
“However, there is also the question of whether gas taxes should be used to decrease fuel consumption in order to protect the environment and reduce pollution. Pigouvian taxes, named after Arthur C. Pigou, a renowned English economist from the early 20th century, are taxes that attempt to make up for undesirable side effects of certain industries—what economists call "negative externalities." Pigouvian taxes are controversial and often difficult to calculate; they complicate the gas tax debate considerably.”
They then go one to identify various Tax Foundation publications and blog posts, which can clarify the issues related to the gas tax. Don’t be swayed by the political rhetoric. Rather, arm yourself with facts.