When Gas Consumption Drops…Raise the Gas Tax!

I thought Congress had hit bottom a while ago when, in the face of catastrophic fuel prices they indignantly refused to lift the ban on drilling. As we all know, Bush then lifted the executive order against drilling. Oil prices fell, but that little taste of public good wasn’t palatable for our august lawmakers. Now—in a very quiet bid to see just how low they can go—they are talking about raising the federal gas tax.

The problem, of course, is high gas prices. Americans have responded by driving less. We are buying more online, consolidating errands, telecommuting or making other creative changes to our work hours. All this has had the cumulative effect of lowering the amount of gas we buy and, therefore, lowering the amount of tax we pay on that gasoline.

Am I missing something? Isn’t that what the environmentalists, not to mention their congressional pals, wanted? Ridiculously high prices and lower consumption? Of course, they wanted to accomplish this via draconian taxation schemes, but why quibble over methodology? The results are the same: Prices are high, consumption is dropping and business is taking one hit after another. They all ought to be holding hands around a campfire (assuming they have the carbon credits to actually have a campfire) singing Bob Dylan protest songs and making speeches in celebration of their victory.

Too bad, winning just isn’t enough. You see, there is a dark side to this scenario, a dark side that few, if any, considered when they first placed a tax on gasoline. Placing a tax on a consumable means that the more people purchase that consumable, the more money comes in from the tax. It follows, therefore, that the less people buy, the less money comes in. That is the nature of the gas tax. Now, if the gas tax was funneled into general revenue, it would be one of many income streams and its fluctuations wouldn’t have such a serious effect. That, however, is not the case. When the gas tax was passed, the revenue was devoted to a single, very necessary purpose.

The gas tax provides funds for highway, road and bridge construction and maintenance and without that money our transportation infrastructure would deteriorate well beyond its current state of decay. Losing money from highway funds would also cost us many thousands of jobs nationwide. According to the American Road and Transportation Builders Association, The nation would lose 379,537 jobs in fiscal year 2009 and a total loss of $14,016,051,359 if something is not done to get more money into the highway fund.

The answer that Congress came up with to forestall this: Raise taxes on fuel. Instead of the gas tax holiday that Hillary Clinton and John McCain talked about during the primaries, Congress wants to go the other way and raise that tax by ten-cents per gallon for gasoline and diesel fuels. That would mean the taxes would be 28.4-cents per gallon and 34.3-cents per gallon respectively. There is no talk from the leadership of eliminating wasteful earmarks or reducing spending in other, less necessary, areas and transferring the difference to make up the shortfall, that might look too much like responsible government and we can’t have that, can we? No, all the congressional leaders can think to do is reach deeper into your pocket. After all, you might have some change left from your economic stimulus check.

If high gas prices have had a chilling effect on business, how much worse can it get with Congress adding to the pain? Many independent truckers—small businessmen on wheels—are already on the edge of breaking even. If they can make a profit on a run, it is a tiny profit at best. A higher fuel tax may be just enough to push many of them out of business. How about other small businesses? Their own transportation costs are already high. Now they will have to pay more for items coming in to cover the shipment costs associated with maintaining their inventory and they will have to charge more to their customers for the goods themselves as well as for shipping handling.

Inflation is bad enough, but inflation spurred on by stupid tax policies is even worse because it isn’t market forces that are causing the inflation, it is the government itself. We are living in a time when, more than any other time in our history, open eyes and creative thinking must be demanded from our leadership. Gone are the days when a clearly defined external adversary can be blamed for our woes. Today’s problems—domestic and foreign—are far more subtle, far more difficult to pin down. Because of this, new ways of thinking about issues and different ways of taking action must be developed. This fuel tax proposal is, to be polite, a relic of the old way of doing things when it would be unthinkable that gasoline consumption would ever go down. It has, and the more it costs, the less people will use it. That means it will hit the transport industry the worst and that means a vicious spiral of inflation for all of us. It must be recognized for what it is: bad for business, bad for consumers, bad for the economy and bad for the nation.

We are not getting our money’s worth from these people and it is time that came to an end. I urge everyone to contact their senators and congressmen to protest what can only be seen as an anti-business, anti-prosperity proposal. You can reach your congressman through www.house.gov and your senator at www.senate.gov . After all, these people work for us, don’t they? Isn’t it time they were brought to heel and reminded of that?