Out of Control

In this NYT piece Daniel Gross makes the often-made point that our gas taxes are really low when compared to other industrialized nations.

The International Energy Agency provides this breakdown of Average Gas Taxes Per Gallon (as of Aug 2006):

Britain $4.24
Germany $3.99
France $3.80
Italy $3.75
Japan $2.07
Canada $1.03
U.S. $0.40 (includes state and federal taxes)

Gross makes another often-made point: the last time we increased the federal gas tax was waaaay back in 1993.

And then comes a rather new point: many Republican economists (or economists associated with the Rs) are coming out in favor of hiking the gas tax. Alan Greenspan, Greg Mankiw, Andrew Samwick, and others say it’s a good idea and many leftish economists have been saying this for a long time. Makes it seem like there’s a new consensus emerging.

But the piece leaves out some pretty significant points.

Many people want to hike gas taxes to reduce driving and—while it’s true that Europeans drive less than we do—the gap is closing. In fact, even with ultra-high gas taxes, driving is increasing in Europe. It’s been increasing faster there than in the states.

Also, if you want to talk consensus, the real consensus among economists is for road pricing. No pricing results in more congestion, which results in 2.3 billion gallons of wasted gas each year.

And Sam’s last post suggests that higher gas taxes might make pricing a tougher sell politically. Seems like the higher gas taxes get the more likely motorists are to complain about “double taxation.” Expect more of this: “We already pay so much at the pump, and now you want us to pay a toll!”

[But if the “look what Europe does” argument helps raise gas taxes, can we use it to lower corporate tax rates? See this, this, and this]