In response to a recent post about not only holding on to the current gas tax rate, but increasing it, a few things need to be kept in mind. A rosy picture was painted about how a double-digit gas tax increase would have nothing but wonderful outcomes. Pro-environmentalists have been playing this scenario for some time. It will drive people out of their cars, it will reduce pollution, it will spur mass transportation, the pipe dreams goes on. The intentions are good and it is something we need to pursue, but the short-term ills are really something to consider. Gasoline for our cars is something that is not optional, it’s like food for our tables. Raise the price and something has to give. I’m formerly from Washington state, which has one of the highest gas taxes in the nation. We all remember the summer when gas topped $4 per gallon. When this hit, the impact was profound as consumers stopped spending. Businesses failed, delinquency rates on credit escalated, layoffs came. And yes, fuel consumption dropped. It was always wondered by economists, what price level would push Americans out of their cars? Four dollars per gallon seemed to be it. It truly kicked off our recession. The state of Washington committed itself to some major mass transit and road construction projects to be funded by, the gas tax! What happened? Gas tax revenues dropped substantially, literally millions gone overnight. Projects were dropped, ones too far committed to had to be funded by alternate means. Washington’s budget was written with these higher levels of revenue and it was left scrambling. Demand for public transit spiked but there were no funds available for increased bus runs or fuel, forget about any major transit projects.
We cannot argue that green mass transportation is not the way of the future, but it cannot be achieved overnight. Gasoline for the time being is a staple for a household, just like food. Bump the price and something will give. There is a real point of diminishing return on a gas tax, and the diminishing can happen fast. I just hope consideration is given to the ills if we truly want to spike up our gas tax.