Raising fuel taxes may be a more effective way to curb gasoline consumption than President Bush’s recent call to increase use of alternative fuels, some analysts say.
It’s a controversial strategy, deemed by most politicians as suicidal to support.
Yet a handful of economists and corporate executives from the right and left are becoming increasingly vocal in advocating higher energy taxes.
Their numbers include former Federal Reserve Chairman Alan Greenspan, General Motors vice chairman Robert Lutz, New York Times columnist Thomas Friedman and Yale University energy economist Robert Repetto.
“I support higher gasoline taxes over time,” said Mike Jackson, chief executive of car dealer AutoNation. “It would send a message to consumers that (imported oil) is a very serious national security matter.”
The U.S. federal gas tax of 18.4 cents a gallon – low compared with many other countries – gives consumers the wrong message about the military, political and social costs of acquiring overseas petroleum, he said.
“I know the idea is anathema, un-American, causing reaction right up there with the Boston Tea Party,” said Jackson, a Republican and self-described fiscal conservative. “But there is a mind shift going on when people look at Iraq and realize that our reliance on imported oil is supporting both sides of the war.”
Jackson said he supports increasing federal gasoline taxes 10 cents a year for 10 years to bring the U.S. closer to other countries, particularly European, where high fuel-tax rates limit consumption and encourage vehicle efficiency.
The average state and federal tax of 43 cents a gallon in the U.S. is a fraction of the $4-a-gallon or higher fuel tax in countries such as Turkey, Norway and the United Kingdom.
In his State of the Union address last week, Bush called for a 20 percent decrease in gasoline consumption through more use of ethanol, other technologies such as making liquid fuels from coal, and increasing vehicle gas mileage.
The proposal generated mixed response, with particularly strong support from ethanol backers and opposition from groups that question the economics and energy-efficiency of ethanol production.
Virtually no politicians have advocated higher fuel taxes.
“Increasing the gasoline tax is the least politically palatable of our options,” said U.S. Rep. Diana DeGette, a Denver Democrat. “It’s hard to get any political traction on that issue. But we need to keep everything on the table and talk about it.”
DeGette said she would prefer to reduce gasoline use by increasing government-mandated vehicle fuel-efficiency standards.
Former Bush speechwriter David Frum said taxing all fossil-fuel energy would enable the marketplace to develop the best ways to deal with higher fuel prices.
“To the extent that Americans decide it’s an important goal to reduce oil and gasoline use, there’s only one rational way to do it,” said Frum, a resident fellow at the American Enterprise Institute, a free-market advocacy group.
Using taxes to set a permanent floor under energy prices would require consumers and industry to make choices on how to deal with permanently higher costs, he said.
For example, consumers would weigh energy prices in their decision on the size of homes and vehicles they buy, Frum said, and automakers would assess the cost of retooling their plants if they believed consumers want more fuel-efficient cars and trucks.
The rub, he said, is how the taxes would be used. Democrats would support spending the revenue on programs such as renewable energy, while Republicans would prefer using it to reduce other taxes such as capital gains.
But the idea of raising energy taxes is controversial even among free-enterprise advocates.
“I would absolutely oppose it,” said Jon Caldara, president of the Golden-based Independence Institute. “A gasoline tax is a terrible tax. It’s one that should go down over time as cars become more fuel efficient.”
Staff writer Steve Raabe can be reached at 303-954-1948 or sraabe@denverpost.com.
What’s in a gallon
The price of every gallon of gasoline is made up of four factors. Below is the breakdown, using the U.S. average fuel price for Jan. 22: $2.17 per gallon.
Taxes: 43 cents
Distribution and marketing: 20 cents
Refining: 28 cents
Crude oil: $1.26
Total price: $2.17
Source: Energy Information Administration
