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A Dozen Reasons for Gasoline Taxes

April 2003

Martin Wachs


The author supports higher fuel taxes because they are more equitable and efficient than other options. Fuel taxes are lower than they have been in the past (even accounting for inflation), but they are also below the optimal tax rate, especially when compared to other countries. Consumers are willing to spend money at the pump even when geopolitical issues arise, and a fuel tax would be unlikely to be rejected. Concerns about transportation expansion and congestion make fuel taxes more palatable due to rising costs. Taxes and borrowing will be raised in other methods to support transportation costs anyways, so raising gas taxes a more logical step to supply anyways. Fuel taxes are cheap to implement, and encourage efficiency in the transportation system (by making it more costly to utilize transportation, reducing excess traffic). Fuel taxes would also reduce the amount collected from general taxes, making them more equitable for poorer people (as poorer people utilize public transit more).

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Policy Implications

State policy makers should seriously consider increasing fuel taxes, given their more equitable nature. Tying fuel taxes to improve road infrastructure as well as improving transportation system would be the optimal method of getting these taxes implemented. Fuel taxes are also more equitable and cost-reducing, allowing for policy makers to see them as a viable reelection method.

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