By Kelsey Mays on February 2, 2009
Volatile fuel prices — AAA says the national average for a gallon of regular was $2.98 a year ago, $4.11 last July and $1.89 today — have led to calls from prominent car dealers for a higher federal gas tax. Right now, the federal tax is about 18 cents per gallon; on average, states add another 27 cents. The idea is simple: Higher gas taxes encourage buyers to purchase more fuel-efficient cars, and the extra revenue goes to fund public transit, infrastructure maintenance and the like. Gas prices in many European countries are the equivalent of about 60 cents for every dollar.
“Cheap gasoline combined with fuel efficiency mandated by the government is an economic disaster for America,” Mike Jackson, CEO of dealer group AutoNation, said at an Automotive News conference last month. He’s pushing the idea of a $1-a-gallon tax phased in over five years.
At today’s Washington, D.C., auto show, former Secretary of Transportation Norm Mineta said he disagrees. Mineta, who also served as Secretary of Commerce during the Clinton administration, acknowledged that carmakers “just get whipsawed” by fluctuating fuel prices. Case in point: With gas prices plummeting in December, hybrid sales were down 10 percent for 2008, further hurting automakers’ chances of getting a return on their investments in such technology. But Mineta said he thinks a higher gas tax would do more harm than good.
“I’m not convinced in today’s marketplace that a gas tax is a sustainable form of revenue for building infrastructure,” he said. “Sure, I’d like to see a 40 cent [federal] gas tax. ... But in terms of impact on the public, I would just not want to dampen the potential [for economic recovery]. There are other ways to deal with marketplace demands.”
Mineta advocated a gas tax increase during the Bush administration, but Bush disagreed.
It seems everyone at the D.C. show has a stance on the issue. Auto Alliance CEO Dave McCurdy pointed to a gas tax floor, an option in which a variable tax raises gas to $3.50 a gallon; if gas is higher than $3.50, the tax is withheld. The group is an advocacy organization representing 11 automakers.
Roland Hwang, vehicles policy director at the California-based Natural Resources Defense Council, said he thinks the task of stabilizing fuel prices belongs to major players like power plants, large industries and oil companies. Increasing the federal gas tax would be “really, really politically difficult,” Hwang said.
Are gas taxes necessary to move people to more fuel-efficient rides? Perhaps we remember the sting of summer gas all too well: The nonprofit Consumer Federation of America’s latest survey, released today, reports that despite gas prices under $2 a gallon, most consumers intend to buy a vehicle whose mileage averages 5 mpg better than that of their current car.
We’re interested to hear what you think. Weigh in with your thoughts below.
Senior Consumer Affairs Editor Kelsey Mays likes quality, reliability, safety and practicality. But he also likes a fair price. Email Kelsey