Friday, April 02, 2004

Gas Attacks!

Matt Miller at the Center for American Progress suggests that gas tax is not such a bad idea, afterall other countries have done it.
I would like to point out one thing. Gasoline taxes are indeed regressive. They do hurt the poor people more than the rich. So, unless effort is made to consciously address this issue, the objections raised to oppose higher taxes stand.
So, what can be done to mitigate the impact of higer gas taxes. Here are some options:
* Provide appropriate tax credits to people on their income. In fact, we can make the tax credits progressive i.e. rich people need not get these tax credits. Wouldn't that mean that we will charge more for gasoline to the rich people. Yes, but that is what a progressive tax system attempts to do. Tax the rich more than the poor.
* Alternatively, the fuel tax revenues can be used as rebates for people to purchase more environmentally friendly vehicles. For example, the hybrids currently do cost a couple of thousand dollars more than the compareable IC engine counterparts. So, the rebate on purchase of a hybrid helps you and in addition you will save more gas when you drive one. Remember, not to drive too much though!

These are very simple ideas. The people who write tax codes can figure out many other ways so that the additional tax on gasoline does not pinch the pockets of ordinary people. The real question is whether the ordinary people like you and me understand that this can be done and support it.


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