Akerson Is Right On Gas Tax Hike

By Jeremy Anwyl June 7, 2011

General Motors Chairman and CEO Dan Ackerson (below) is quoted in The Detroit News today arguing for up to a $1 per gallon federal gas tax. Regular readers of this column will no doubt remember that I have supported such an increase. In fact, I think the increase will need to be higher than the $1 per-gallon proposed by Akerson to change consumer behavior to purchasing smaller, more fuel-efficient vehicles.

GM Gas Tax.jpgIf there is one issue sure to stir people up, it is the idea of increasing the gas tax. Just look at the comments at the end of my previous column. Some of this is just anti tax -- a point I certainly get. Some of it is really a fundamental disagreement about fossil fuels. Is pollution a problem? Are global supplies limited?

These are serious issues, but our policy decisions seem established. Isn’t there consensus that pollution should be reduced? I guess the idea of peak oil is a bit more debatable, but presumably we can all agree the supply is finite, then keeping a lid on consumption would seem to be a good thing.

Since I wrote my last column in support of a gas tax, the national discussion has moved in the direction of support for cutting spending -- though not yet as to how much to cut. This gets interesting as it gives a context for a gas tax increase. Would there be support for the idea if it meant shoring up Medicare? Or Social Security? We are a country slowly coming to grips with some very unpleasant choices. Perhaps the best way to think about increasing the federal tax on gas is as one of the best on a list of bad -- or certainly unpopular choices.

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piperboy72 says: 6:31 PM, 06.07.11

There is no shortage of needed expenditures in roads, bridges, etc. We need a higher gas tax to be able to afford to invest in our infrastructure. Also a higher gas tax will help to keep more of those dollars paid at the pump here in our economy. This would also help to somewhat reduce the gas price fluctuations since less of the overall cost of gas would be directly related to the price of oil.

Sure paying more for gas is unpleasant and for some people even choosing to buy gas or groceries this can be just too much to bear. However the price is going to go up, and up, no one is debating that. The question is really about taking steps now to manage the increases, doing what we can to reinforce our economic security and stability, and motivate people to make smarter transportation choices. We cannot afford to sit back and wait.

pushrod says: 7:01 AM, 06.08.11

A gas tax makes sense from several perspectives, and yes it has it's consequences. First, if you truly want people to show interest in buying fuel efficient cars, then make the fuel more expensive. Trying to force the manufacturers to sell a particular product mix puts the burden on a group that has, at best, modest control over influencing what people buy. They took that tax approach in Europe and that, combined with the nature of their cities, has lead to people buying smaller and more fuel efficient cars.

Second, it generates revenue to (presumably) cover the upkeep and upgrades to the infrastructure used by the same people and machines that also use the fuel. If you don't want to pay more for gas, either buy a more fuel efficient vehicle or drive less. Most people have some control over that. While there is always a minimum base cost for maintenance, fewer vehicles using a road means less wear-and-tear and less cost to maintain it.

Yes, it means it costs more for people to get to work. That will have a chilling effect on things like home-building, since people are more likely to try to live closer to where they work, and not in newer neighbourhoods that are often further away from where businesses are. But it may also act as a boost for public transit, and potential improvement in that sort of infrastructure.

It also means a very, very slight increase in the cost of goods, since shipping is higher. The marginal, per-unit cost, however is minimal, and at most pennies, but manufactures, wholesalers and retailers will use this as an excuse to raise prices. It will impact people's incomes, but it also means their pensions and investments (which represent the largest shareholders in public companies, not high net worth individuals) see a greater return on their investments. Privately held companies may also see a bump in employment, as more cash is available for hiring. Paying more isn't all bad, there is some good as well.

I'm generally not pro-tax. What I object to most are taxes that I cannot influence and I have minimal control over, like income and corporate taxes. What I have less of a problem with are taxes where I have some control, specifically consumption-based taxes, where I can choose to use less (or none) of something and pay less tax as a result.

throwback says: 8:23 AM, 06.08.11

As the government (pick any administration in the last 40 years) has shown such remarkable fiscal discipline I see no reason not to give them more money to spend. I'm sure the funds would go to worthy endeavors, the government is so good at picking winners and losers. Yes, I am being sarcastic. Is a gas tax a good idea? It could be, depending on what the additional revenue would be used for. If history is any gauge the money will go for additional spending on pet programs by powerful members of congress or the President. How about the government show some discipline in how they currently spend the money we pay first, like spending even close to what they take in. Then we can talk about giving them more money to spend.

circlew says: 1:40 PM, 06.08.11

Raise the gas tax raises prices for every other good that needs energy to be produced. Depression will result.

Force GM, Chrysler and Ford to produce more aternative energy vehicles by driving up the CAFE. The Prius is blowing away all U.S. produced hybrids because it is the best for the most value effective proposition. The US is so far behind so raising the gas tax is the wrong way to go.

Only CEO's can afford that!

circlew says: 2:11 PM, 06.08.11

Ackerson is dead wrong. GM is one of the biggest reasons we can not buy alternative fuel vehicles.

Toyota is the biggest reason we can.

I will vote for increasing the CAFE standard by 5 mpg each year so GM is forced to build cars that will save energy.

Until then, I see the competition offering far better choices.

Jeremy, take a look at the top sellers and you know that the US consumers favor Asian brands because the quality and the efficiency were designed in far ahead of the Big 3 historically.

dzajic says: 6:34 AM, 06.09.11

I support a gas tax, but ONLY if it supports tax credits for highly fuel-efficient vehicles. Not infrastructure, not public transportation, not ANYTHING else. Tax credits for alternative vehicles support private business, which ensures the money will be used the best possible way. That is, it would go directly into the hands of consumers, who are the best at making decisions when it comes to value. I HATE government, especially when it comes to spending money, but I think it can serve as a channel to force money to get TRANSFERED to a certain economic sector. In that case, the forces of capitalism are still allowed to function freely. It's also effectively a self-terminating tax, because as more fuel-efficient vehicles are bought, less fuel will be purchased, so less tax revenue will be generated by the tax and the consumers will feel less impacted by it. To make this work, the fuel efficiency bar for the tax credits needs to move higher to keep an upward pressure on average fuel economy. The government has already been doing this for a decade or more with hybrid/electric vehicle tax credits. However, in this economy, the money (and political support) for these tax credits is getting harder to find. Since the public is extremely hostile to even the suggestion of a gas tax increase (as they should be to ANY tax increase), the PR effort would need to be monumental. They need to make it clear that the government won't be spending the money, and that it would actually help consumers, both in the short and long term, by making fuel highly efficient cars affordable now, and gradually reducing our dependence on fossil fuels. The latter ensures the price of fossil fuels will be more stable in the future, since the market will not support arbitrarily raising prices when there are alternatives.

So, YES to a gas tax increase, BUT it should exclusively fund a push to greater fuel efficiency. That is after all, the ONLY reason for doing it in the first place. You tax what you DON'T want, and you subsidize what you DO want, and you let consumers decide where the money goes.

brn says: 3:18 PM, 06.09.11

I've long been in favor of increasing the gas tax (both at the federal level and at the state level), but for different reasons. Quite simply, it hasn't kept up with inflation. Combine that with increased fuel economy and there isn't enough revenue for maintaining the needed infrastructure.

I think $1/gallon is bit dramatic. I'd like to see the increase (combined state and federal) more around 40 cents.

I'm very much against using it just another form of revenue. The gas tax has a purpose and it should serve that purpose. It shouldn't be used to fund other things. Well, that's not true. If you're going to use it to fund more than the infrastructure, you need to decrease a tax somewhere else. We get taxed from too many directions already.

veritas5 says: 6:22 PM, 06.09.11

SO, Mr.Ackerson accepts government subsidies to produce unwanted automobiles (Volt) and now has the unmitigated
gall to suggest a $1.00 tax per gallon on all Americans in order to control our behavior.

In past times Administration sycophants would at least "sugar coat" their proposals before "giving it" to unsuspecting taxpayers. Not so with Mr. Taxerson.

Rather than imposing his Master's agenda on us why not resign from GM and work for Ford? He would be much busier, ( over 40,000 unsubsidized pickups sold versus 481 heavily subsidized ( tax payer funds) Volts sold in the same period.

Prediction: This loser will be history in six months and his mentor will follow him a year later.
They will be free to attend the Karl Marx school of Economics in Havana while tuning up 57 Chevys.


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