Friday, January 18, 2008

Will taxes on gas-powered cars become the cigarette “sin” tax of the future?

We now have tax incentives for alternate fuel vehicles, hybrids, etc as well as increasing gasoline taxes. And more are being proposed. Fuel efficiency standards are changing, gas prices are increasing, POTUS is asking/begging OPEC to open another valve….

Where is this trend going? It’s not hard to imagine that in large cities and environmentally conscious states people will be given even more incentives to drive alternative energy vehicles. The taxing will be levied for reasons that promote quality of life such as control of pollution, traffic and noise, as well as reducing the use of fossil fuels. Tax breaks will be given for alternative fuel vehicles, while those that insist on driving arcane gas guzzling cars will pay more tax. This is already happening in areas of London, where large vehicles like SUVs are taxed when driven in congested areas of the city.

The message appears to be that if you choose unhealthy, polluting ways, you will pay for the privilege.

Does this sound familiar? It reminds me of the cigarette taxes of today. Those who continue to pollute whether driving or smoking will continue to pay more in taxes. A lot of people are not going to like this, just like a lot of smokers do not think it is fair for cigarette taxes to shoulder the burden of so many government projects.

Have you noticed that when one tax is decreased, many times the lost revenue is then recovered by raising cigarette taxes? This is exactly what happened in Texas, recently. The Robinhood plan using property tax revenue to fund education was declared unconstitutional. Since this tax could no longer be collected based on property values, another source was needed. Voila. It was levied on to cigarettes. Evidently, the population of cigarette smokers is declining, and so is the magnitude of their dissent.

Many speculate that we are already at peak oil production. It seems obvious that dependency on any one type of fuel is a mistake. We need to fund more research to get alternatives to the main stream. Where will the tax dollars originate? Will this money be derived from an increase in taxes on gasoline powered cars? Or cigarettes? LOL

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