Monday, September 12, 2005

Using Taxes to Keep Gasoline Prices High Makes Sense to Some

Bab Davis in WSJ:
Walter McManus, a University of Michigan automotive economist, estimates that if prices jumped to $2.86 a gallon and stayed at that level, sport-utility vehicle sales would fall 18% in five years. If gasoline rose to $3.37 a gallon, SUV sales would fall 28%. Sales of pickups and vans would plunge.
...Congressional Budget Office Director Douglas Holtz-Eakin calculates that a $1 increase in gasoline taxes would cut consumption 20% within 14 years.
...( economist Mark) Zandi urges a flexible tax, aimed at keeping gasoline prices at roughly $3 a gallon; the tax would fluctuate with gasoline prices. A simpler way is to increase gasoline taxes by $1 a gallon. The idea is the same: make gasoline prices high and predictable.
More power to them.


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