Commentary: For our security, raise the gas tax
May 27, 2010
The Nevada Department of Transportation wants to replace our gas tax with a mileage tax, raising privacy concerns. We should increase the gasoline tax instead, for both economic and security reasons.
Taxes generate state revenue to help fund needed road construction, but they also affect our incentives. When consumption has spillover costs, it is efficient to discourage overuse.
We import most of our oil, and three of our primary sources, Saudi Arabia, Nigeria and Venezuela, are countries with repressive regimes. Saudi Wahhabists are a prime source of funds for al-Qaida and other Islamic terrorists. Anything we can do to reduce our imports of oil from those countries will reduce the amount of our money going into the hands of our
Each American consumes twice as much gasoline as the average Japanese or European. While we may need to drive more because we live in a big country, our cars are also less efficient, our cities are poorly designed, and we have little desire for mass transportation.
We consume so much because our gas is relatively cheap. Adjusting for inflation, gasoline costs little more than it did in 1976-78. Europeans pay 2.5 times more than Americans due to higher gas taxes. Europe’s oil consumption has remained flat since the 1970s, while ours has skyrocketed.
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The best policy is to raise the federal excise tax gradually, so people have time to adjust their driving habits, and significantly, so people have an incentive to waste less gasoline.
In the meantime, Nevada should raise its gas tax by a dime, and a year later by another dime. Nevada’s average gas tax is now about 52 cents per gallon, including the federal excise tax of 18.4 cents. Californians pay about 14 cents more. While a local solution to a national problem is not optimal, it is better than nothing.
A dime increase would generate about $125 million per year. This could be used for highway construction, or for other purposes. Some of this could be put into the general fund for the next biennium, to help the state meet its current shortfall. Some could go into a fund to be used to provide rebates to Nevadans who buy more fuel-efficient vehicles, while other rebates could go to rural residents who generally drive more or to poorer residents.
A tax on a vehicle’s mileage, however, sends the wrong signal, even if it is adjusted by weight. It may collect a more reliable amount of revenue, but we need to use and import less petroleum. A mileage tax would still reward people who drive gas guzzlers.
Nevadans need to do our part to help reduce our dependence on foreign oil, and the consequences of that spending on our national security. This is both a smart thing to do in the current fiscal crisis, and the patriotic thing to do in any case.
• Professor Elliott Parker teaches economics at UNR. Dr. John Scire retired from the U.S. Army Reserve as a captain, and teaches energy policy at UNR.