The American Spectator

The Public Policy

The Real Gas Price Gouger

By Eric Peters on 3.16.06 @ 12:06AM

When gas prices jump by 50 cents (or more) per gallon, many people get angry at "Big Oil" -- and decry what they consider "price gouging" at their expense. But how come no one gets upset about the 50-70 cents (or more) per gallon in taxes imposed by government?

Federal (18.4 cents per gallon), state (35-50 cents per gallon), and local motor fuels taxes (anywhere from 5-10 cents or more per gallon) account for at least one-third of the per-gallon cost of gasoline -- an outrageous levy in both absolute terms and as a percentage of the purchase price of the item being taxed. Imagine, for instance, if you had to fork over 50 cents in taxes for every $1 or so of groceries you purchased.

And gasoline is no less an "essential" than food for most people.

These taxes are also viciously regressive -- that is, they take more as a percentage of disposal income from the least able to pay. After all, most of us have no choice about driving, regardless of our income. People in areas outside of major cities (where there is no public transport system) especially. The "rich" (a frequent whipping boy of class warfare types) may be able to afford the exactions without it affecting their day to day lives. But what of the person of modest means?

Let's assume a gas tax (all levels) of 50 cents per gallon. (A lowball figure, by the way; in some states, e.g. Connecticut and New York, combined motor fuels taxes imposed by all levels of government can push $1 per gallon or even more.) A purchase of 15 gallons of fuel (the amount it takes to fill the typical new car's tank) would entail $7.50 in taxes alone. Most people burn a tank of fuel per week (at least), so that means $30 per month down the rathole, just for gas taxes -- or $360 per year.

How many people do you know who can afford to lose nearly $400 annually without it affecting their budgets?

The gas tax alone pretty much vitiates the Bush tax cuts all by itself -- and generates in excess of $50 billion annually in "revenue" for our friends in government.

And yet, they (our friends in government) hunger for even more.

Since 1997, 14 state legislatures have voted to raise their state gas taxes a total of 17 times; these increases ranged from 1 cent per gallon in North Dakota to 6 cents a gallon in Ohio. Many local (county/city) governments around the country tack on "inspection fees" and other nit-picky taxes -- including a "seawall tax" in Mississippi and a "special petroleum tax" in Tennessee. (Click here for more details.)

There is talk of adding a nickel (or more) to the federal gas tax, too. Some lawmakers want another 50 cents per gallon (or even more than that).

And yet, no one complains much about this endless, brazen highway robbery -- which comes after, let us not forget, federal and state income taxes which together snatch anywhere from 15-40 cents of every dollar we earn right off the bat. So with the change left over, we're compelled to pay yet again -- and then again. And at confiscatory rates, too.

Of course, we're supposed to be calmed by the rationale that all this money being extracted from us is used for the upkeep and expansion of our transportation infrastructure -- building new roads and maintaining existing ones. But our roads are in disrepair and increasingly over-crowded. Our money doesn't seem to be going very far. (Or perhaps it is merely going into the pockets of well-connected no-bid contractors?) At least part of that $50 billion extraction is diverted into "safety" programs -- whatever that means.

Regardless, there's little outrage, despite huge costs imposed with increasingly budgetel-looking results. Meanwhile, most of us are also paying those extortionate federal and state and local (and property and sales and annual decal and countless other) taxes... for, what exactly?

It's something to think about the next time prices rise -- and the Greek chorus begins anew about the supposed depredations of a chimera called "Big Oil."

Letter to the Editor

topics:
Taxes, Transportation, Law, Oil