TCS Daily

Poor Proposals

By Ben Lieberman - July 6, 2004 12:00 AM

Of all the editorial responses to expensive gasoline, the strangest is easily The Washington Post's call to raise the gas tax. That's right -- gasoline has been in the news precisely because its price is high, yet the Post's editors want to see it go higher!

Several Post editorials have tried to explain the logic. On April 4, the paper described as "sensible" a 50 cent per gallon tax increase, an idea endorsed by Sen. John Kerry in 1994 as a means of raising revenues and reducing consumption. It chides both President Bush for never supporting such an increase and Kerry for abandoning it. Then on June 3, the Post ran two editorials explaining that a higher tax would reduce the nation's reliance on uncertain oil supplies and encourage Americans to choose more fuel efficient vehicles.

The paper's op-ed page has also been making the pro-tax case. On June 1 columnist David Ignatius -- in a piece titled "Why Gas Prices Are Too Low" -- endorsed Western European-style gasoline taxes, which boost the overall price above $5.00 per gallon across the Atlantic. And in a May 21 piece, Charles Krauthammer argued that a tax increase would help defund OPEC nations, several of which use these petro-dollars against our national interest.

No doubt, a gasoline tax increase, especially a hefty one, would bring down demand, both by forcing the public to choose more fuel efficient models and by reducing total miles driven. But is this such a good thing?

Certainly not from the consumer's perspective. Fuel efficient vehicles are already on the market for those who want them, but a high gas tax would effectively force this choice on many who do not. Millions of households would have to give up the added capacity and safety of larger vehicles in favor of smaller ones.

Nor would these consumers save money. A gas tax capable of inducing consumers to switch to smaller cars would almost certainly have to be high enough to still raise overall driving costs.

Hardest hit would be the working poor, some of whom would be priced off the roads entirely. These workers would be deprived of the expanded job opportunities that come with being able to drive to work and instead would be limited to the subset of jobs accessible by public transportation. Even those low income workers who could still afford to drive would face commuting costs eating up an even bigger share of their paychecks.

A 2000 University of California study found that "having access to a car has disproportionately large effects on the employment rates of workers that are spatially isolated from employment opportunities." Indeed, the Post ran a number of news stories in the years after enactment of welfare reform that highlighted the challenges facing former welfare recipients living in the inner city whose best job prospects were miles away in the suburbs. But, to date, none of the Post's recent entreaties to raise gasoline taxes has even mentioned this impact on the poor.

Would all this pain be worth it? Probably not. Seventy-five percent of the world's oil is used outside the United States, so cracking down on the 25 percent used here would not make the oil sheiks and mullahs significantly less wealthy. Overall, a big gas tax increase would impose a considerable sacrifice on the driving public, but would change little in terms of geopolitics, the environment, or the nation's energy future.

The vast majority of Americans hope that gasoline prices will continue the trend over the last month and go down, not up. This is particularly true for those least able to afford $1.90 or higher gas. Perhaps the Post's editorial board will think a bit more about the consequences of a big gas tax hike and join them.

Ben Lieberman is the Director of Air Quality Policy with the Competitive Enterprise Institute, in Washington DC.


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