The Professor's Notes

Where my thoughts and your eyes (and now ears!) collide

Higher Gasoline Taxes?

Posted by Steve Brady On January - 9 - 2009ADD COMMENTS

I was listening to our local public radio station this morning, and they were discussing the reduction in revenues to fix PA highways and bridges because (as they said)  the price of gasoline is so low.  Of course, they correctly pointed out that the real reason for lower revenues was the reduction in consumption that was driven by a poor economy and high gas prices over the summer.

Many callers talked about how we need to raise the gas taxes, not only to provide funds to repair the highways, but to get people to learn to conserve, and to support alternative fuels. In fact several callers felt we needed a tax “floor” implemented immediately.  A “tax floor” would mean that if the price of gas dropped below a threshold (most said $3/gallon) then the price would stay at $3, and the government would scarf up the difference.  In that way, the government would reap the “windfall profits” of low prices (instead of the consumer).  (see my past discussions regarding windfall profits here.)

Interestingly, if the price rises and falls in part due to fluctuations in demand (and demand changes relative to price) would the price charged ever get much below three, if the gas stations knew they would have to just “give” that to the government?

So I want to know, what is YOUR opinion about gas taxes?  Are you in favor of a higher gas tax?

Look forward to your answers.

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