Friday, May 25, 2007

Hill on gas prices

in response to:
http://www.newsandtribune.com/archivesearch/local_story_156165859.html

Gas prices are quite painful these days—made worse by largely Democratic efforts to restrict supply at the production and refinery levels. Although smooth moves politically, Rep. Hill’s new policy proposals are not an improvement ethically or practically.

First, temporarily dropping the federal gas tax would lower prices by $.18 per gallon. But higher prices are what encourage energy conservation and technological innovation—the two factors that will most help to alleviate our dependence on oil. In addition, the gas tax should not be just another revenue generator for the government or a political football for legislators. The revenues from the gas tax should be targeted to pay for the social costs of driving—pollution and road construction and maintenance.

Second, a subsidy for hybrids is mostly a tax break for the wealthy—who pay the vast majority of income taxes and are far more likely to purchase a hybrid car. Hill’s proposal also calls for tax breaks for car manufacturers—taking money from taxpayers to give to corporations. It seems odd that a Democratic legislator would want to transfer income in this manner.

High gas prices are bad, but poor public policy is worse.