Is it time to increase fuel taxes?

Not so long ago, the country was suffering the effects of a sharp increase in fuel prices, with a gallon of regular gasoline costing in some areas more than $4.00 per gallon, more than twice as much per gallon as we see today.

Back in the summer of ’07 a gallon of regular gasoline cost about $2.75, and the price remained fairly stable until the following October when the price rise began. Prices continued to rise until July of last year, when the price began to drop.

As the price approached $3.50 a gallon, it was portrayed as the most serious problem in a long time. We learned how unfair high fuel prices are to those in the lower income brackets, and more than a few observers castigated oil companies, charging them with gouging the public for their own selfish purposes.

The high prices forced people to cancel or modify vacation plans and made it tough on people who drive for a living and companies for whom transportation costs are a significant cost of doing business; it forced people to car pool and take public transportation instead of driving, and sometimes it meant that people just stayed home.
Blessedly, the high prices had the predictable effect: they reduced demand. When the price of fuel was so high that people couldn’t afford to drive as much as they had been, they cut back. And the lower demand has forced prices downward to about $1.60 for a gallon of regular gasoline, the lowest price in the last four years. That didn’t get the oil companies any “atta boys” to balance the unwarranted criticism of just a few months ago.

But to paraphrase a piece of conventional wisdom, no good development goes uncorrected, and now we hear that the federal government, seizing upon the good fortune of the American people to have substantially lower fuel prices, wants to raise those prices again by imposing an increase in fuel taxes. You see, the tax on fuels goes to make improvements and repairs to the federal highway system, and since people are driving less, they are buying less fuel, and revenue to pay for road, bridge and transit programs is down. Naturally, the first solution that comes to the minds of bureaucrats and politicians is to raise taxes to make up the difference.

The National Commission on Surface Transportation Infrastructure Financing proposes to increase current tax rates by 10 cents per gallon for gasoline, and 12 to 15 cents per gallon for diesel fuel. Currently, taxes are 18.4 cents a gallon for gasoline and 24.4 cents a gallon for diesel fuel.

As taxes go, a user tax like the fuel surcharge is the fairest and least immoral kind. Taxing people’s income and taking what they have earned; taxing estate property that has already been taxed when someone dies; taxing property that they have already paid a tax on at purchase, like homes and motor vehicles; these are unfair and immoral. But taxing someone on what they buy is fair and proportionate.

However, raising taxes—any tax—ought to be the last resort, and that ought to be particularly obvious at this point in time, for a number of reasons. For one, the economy is in turmoil and many Americans are suffering. Investment income for retired people has taken a big hit, and while unemployment is only a little above the full employment rate, it has been rising lately and a lot of people are out of a job.

But the most important reason is that there are other ways to get revenue for necessary and legitimate purposes that should be tried first.

In the United States of America, government’s role is to serve the people, not to be served by them. So the first question elected officials and the hired hands that work for government must ask is “how can we fix the roads, bridges and other aspects of the transportation system without having to take more money from those we serve?”

I’d be less opposed to increasing the tax on fuels if my government was lean and efficient and if we had maintained the idea of small government instead of building a gargantuan federal bureaucracy that goes far beyond the ideals of our Founders. To even entertain the idea that when they were writing the Constitution they imagined that the government would include a huge welfare system, or that it would tell you what kind of light bulbs you can buy, or that it would tell businesses they have to pay a minimum wage, or that we would have a department that tells states how to educate their children, is ludicrous.

It’s time for the people we’ve elected to do their job. Instead of asking Americans to pay more, when some of them already pay nearly half of what they earn in taxes, get to work streamlining the government.

Get rid of waste and inefficiency, and eliminate poorly functioning and improper programs and agencies. Those two things would save an enormous amount of money.
After that, if we still need money for road and bridges and such, we can talk about tax increases.