The Case for a Higher Gas Tax

I recently began working at WOSU on Open Line, screening callers and maintaining the webpage. It is a lot of fun! Today, we had an open forum where people just call in to talk about what's on their mind. Many callers were very concerned with the rising price of gas. With demand for crude oil skyrocketing due to growing demand from the developing world, not to mention shameless speculation on Wall Street , the price of gas is not likely to plateau any time soon. Within this context, raising taxes on gas seems out of the question for most people. Perhaps the most convincing argument against raising taxes on gas in the US is the lack of alternatives, namely, people have to drive to get around. Taxes, the story goes, are only going to hurt the poor. I would like to respond to that claim.

Many of you know that in most parts of the world, especially Europe, gas is selling for well over $8 per gallon. Why the difference from the US? European governments figure that aside from the cost of gas, driving incurs many other costs. There are steep costs associated with motor vehicle accidents, congestion, infrastructure construction and maintenance, pollution, etc. They heavily tax gasoline to ensure that the people who are causing these externalities and using the roadways are the ones who are paying for it. It turns out that $8 per gallon is the true cost of driving in Europe. In the US, where taxes on gasoline are very low, the government is subsidizing gasoline. This has been part of larger policy failure that has led us to our current conundrum, where we are fuel dependent. The problem arises when the cost of gasoline rises, and the government's subsidy is no longer apparent. Americans are penny pinching, and do not want to pay more for gas. They reminisce of the days when gas was only $2 per gallon.

But Americans need to wake up. Those days are over, and life is going to be getting much more difficult. We have spent the last fifty years creating a car centric society that is desperately dependent on cheap oil. The economy is in danger of collapse because we can no longer cheaply transport goods. A steep tax on gasoline, as part of a broader policy initiative to ween us off oil, is not only smart but necessary. That policy should also include encouraging high density city living and expanding public transportation facilities.

What about the poor? Firstly, a majority of America's poor live in urban areas, namely urban centers. Many of them have no choice but to use public transportation anyway. They will not feel directly the hike in gas prices. Second, no one should be getting a free ride in regards to driving. If someone cannot afford the true cost of driving, which would take into account accidents, pollution, infrastructure, and the like, they should not be driving. That may put some people, like the rural and working poor in difficult situations, but ultimately, they will have to move closer to work or to some place that has access to public transport, which is the desired effect.

The most important advantage of the gas tax is that it will force people to stop wasting gas. You are going to think twice about driving a block to see your friend when gas is $8 per gallon. You may decide to bike to work, which would make you healthy and happy. In the end, the gas tax may just be the cure to many of America's most urgent maladies and chagrins.