Monday, May 24, 2004

Big 3 see tax hike as fuel-saving plan

But higher gas prices make the proposal politically unpopular:

Bill Ford, Detroit executives ranging from General Motors Chairman Rick Wagoner to GM Vice Chairman Bob Lutz to former Chrysler Chairman Lee Iacocca have talked about gasoline taxes as a way of building demand for more fuel-efficient cars. Without consumer demand, fuel economy will continue to decrease, they say.

Dennis Fitzgibbons, director of public policy in DaimlerChrysler’s Washington, D.C. office, says Corporate Average Fuel Economy standards alone encourage more efficient designs, but those gains are offset by people driving more because it is cheaper.

“A gas tax is the only honest solution,” Fitzgibbons says. “It encourages efficiency in the purchase and also the operation of a vehicle.”

But U.S. policymakers have emphasized trying to keep gasoline prices low. The economy is built on cheap gas.

...John DeCicco, a senior fellow with Environmental Defense, says broader economic forces are working against fuel economy. Unlike the early 1980s, consumers likely can absorb gas price increases because incomes have risen much higher than gas prices during the last two decades.

The price of gas has doubled since 1998 without much impact on the sales of gas guzzlers, DeCicco notes. And new car buyers are wealthier than all Americans.

“Everyone is stumped by the consumer side of the equation,” DeCicco says. “The American consumer today is way too affluent for this to be a serious issue.”

...Dan Lashof, climate science director of the Natural Resources Defense Council, says taxes could be effectively used in combination with fuel economy rules to offset the effect of cheaper driving. But he insists gas mileage rules need to be strengthened no matter what happens.

“I have had discussions with auto lobbyists for years, but I’ve never seen them put up a serious effort to match their rhetoric,” Lashof says. “They [taxes] have both been put forward as a kind of facade and excuse for not doing the one thing the administration has the authority to do, which is raise CAFE standards.”

James Dunn, a political science professor at Rutgers University, has studied the politics of gasoline taxation in the United States and other countries. In Europe, Dunn said, politicians have been willing to consider gas taxes as an essential stream of general government revenue. Here, gas taxes have always been dedicated to highway construction and repair.

I should point out that James Dunn has written a very interesting book called The Driving Forces, where he analyses the history of gas tax hikes and the political battles surrounding the automobile. if you don't have muchtime, scan through chapters 1, 2, 3, and read chapter 7.


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