Stop the presses--Auto industry wants higher gas tax

[afransen]

...and I agree with them! Scary. I bet its also a kick in the teeth when the auto industry calls you out on the environmental friendliness of your policies. Poor Harper can't catch a break.

From the Star:


Auto leaders recommend higher gas tax
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Ottawa urged to scrap `feebate' plan that rewards buyers of fuel-efficient cars
May 05, 2007 04:30 AM
Tony Van Alphen
Business Reporter

Ottawa should introduce a gasoline tax to improve the environment and eliminate the new "feebate" program, which rewards buyers of some fuel-efficient models, major auto-industry players say.

Senior industry executives told federal Industry Minister Maxime Bernier at a meeting in Toronto yesterday that a tax makes more sense environmentally and for the economy than the feebate program in the recent budget.

"I think the feebate is flawed," Don Walker, co-chief executive officer of auto-parts giant Magna International Inc., said after a meeting of the Canadian Automotive Partnership Council.

"The general feeling (in the industry) is you shouldn't be picking winners or losers.

"You should be having regulations that are good for the environment.

"We should also be looking at what is good for the Canadian economy."

The feebate program in the 2007 budget gives rebates between $1,000 and $2,000 to buyers of some fuel-efficient vehicles and penalizes purchasers of a few gas-guzzling models with levies of up to $4,000. Ottawa also introduced other environmental measures, including incentives to get rid of old, polluting vehicles.

Critics say the program is unfair to several auto makers and their models; will cost the government money with little impact on the environment; and could hurt jobs in an industry that is a key cog in the Canadian economy.

"Our opinion is that a gas tax is probably the most effective policy," said Arturo Elias, president of industry leader General Motors of Canada Ltd.

Bernier, who represents the government on the council, said later he will take the industry's concerns to his staff and other departments, such as environment and transport, for study. A reporter asked whether Bernier would change or end the program. "We'll see," he said.

Jim Miller, executive vice-president of Honda Canada Inc., said in an interview that, if the government wants to change consumer habits and improve the environment, a gas tax is probably the best method.

Several European countries have brought in gasoline taxes that have prompted many consumers to change driving habits.

"The whole fuel-economy issue is really a fuel-consumption issue," said Mark Nantais, president of the Canadian Vehicle Manufacturers' Association.

"The best way to reduce greenhouse gases is through a gas tax. It's fair, equitable and gets to the issue of consumption."

Other executives say the government's list of eligible vehicles for the rebate is also unfair.

For example, the Honda Fit subcompact, which had the eighth-best rating for fuel consumption of all vehicles in Canada and won a federal award for efficiency, does not earn a $1,000 rebate because the car uses one-10th of a litre per 100 kilometres over the limit. The extra 10th of a litre would mean an average extra consumption cost of about $30 annually.

Walker, chair of the council that works to strengthen the auto industry, also told reporters the federal program encourages people to buy autos made outside of Canada and could adversely affect assembly and parts production here while having little impact on the environment.

He said much better environmental solutions include the program to scrap old cars and spending money on building an infrastructure that will let consumers use alternative fuels.

Walker and other executives agreed a gas tax would not be popular.

"Politically, it is not an easy decision," Miller said. "But it's probably the right one."

Walker noted one of the problems with the high-profile environmental issue is that opposition politicians are criticizing every government initiative, rather than trying to work together for the benefit of the country.

"We need to get away from politically driven decisions and start doing things on fact-based information," he said.

Council member Sandra Pupatello, who is Ontario's minister of economic development and trade, also questioned the effectiveness of the federal feebate program and noted the province is seeking ideas from industry stakeholders on how to boost auto innovation, jobs and the environment at the same time.

Industry watcher Dennis DesRosiers criticized the program and called for a gas tax, pointing to the European experience as proof that the levy has worked in improving the environment.

Legislators and citizens in Canada "need to summon just a tiny fraction of their courage and step up to self-responsibility and accountability and protect our environment through a progressive gas tax," he said in a note to clients.

 

[Prometheus The Supremo]

why not both? a tax and a rebate! the auto industry has enough resources to change but they don't want to.

 

[Hydrogen]

Actually, that change can be very expensive. Automobile companies try to avoid rapid technological change for many reasons. Cost is a big concern.

Beyond this point, I think the purpose of suggesting this tax is to put the costs onto the drivers while avoiding imposed performance regulations for the manufacturers.

 

[EnviroTO]

Or kill two birds with one stone... new gas taxes passed directly to municipalities for transit and environmental initiatives.

 

[afransen]

Frankly, a gasoline tax is a brilliant idea, though and out-and-out carbon tax would be more intelligent.

People really need to get over their hate-ons for corporations. Corporations aren't inherently evil, but more like a force of nature that you need to shape and guide. Provide the right incentive scheme and they can be a powerful force for 'good'.

 

[Hydrogen]

The cost of a gasoline tax will be passed on down stream, resulting in higher priced goods and food. It is largely counter-productive in that its broad application carries no specific aim other than to tax. Couple this with the roller coaster ride that oil companies bring to pricing and what is being cooked up is a recipe for inflation.

The real solution is improve the performance of automobiles and to encourage manufacturers to improve their technologies. Cars are not going to go away, but their negative effects can be greatly reduced by direct action with respect to improved emission standards and efficiency. Gas taxes only squeeze the consumers - many who have no choice with respect to using automobiles.

We need better cars, not more taxes for the sake of taxing.

 

[Prometheus The Supremo]

hydrogen, i agree but it seems the only way industry will change is if it hurts its bottom line. a tax on fuel hogs will encourage people to find better alternatives and this will cause competition at the sales level which will force other companies to get greener. a tax across the board will take away the competition at the sale but relocate it at the pumps.

and of course, cars will never go away thanks to our construction methods post WW2.

the real change will come when alternatives become cheaper and cheaper to manufacture and are more afordable to the average person.

can't wait for the day when you can be on the sidewalk without choking on someones exhaust.

 

[afransen]

A gasoline tax is not a tax for taxes sake. It is an extremely efficient (good for the economy), targetted tax that reduces gasoline usage--usage that causes undesirables like CO2 emissions and smog.

Enforcing better standards for automakers could work, but in order to make consumers want it, you need to make gas expensive. Let's face it: gas is cheap here, compared to the going rate around the world.

Not to mention that taxing a billion through gasoline taxes while reducing corporate or personal income taxes by a billion is actually quite good for the economy.

 

[dowlingm]

Higher gas tax = votes lost in rural Canada. Good luck with that.

 

[JasonParis]

Higher gas tax = votes lost in rural Canada. Good luck with that.

Although rural Canada often votes in a Conservative/BQ bloc anyway regardless of what one taxes and doesn't tax.

 

[Hydrogen]

i agree but it seems the only way industry will change is if it hurts its bottom line.

That's why the auto industry is suggesting a gas tax. It does not affect them directly. It is the driver that carries this cost in such a scheme.

A gasoline tax is not a tax for taxes sake. It is an extremely efficient (good for the economy), targetted tax that reduces gasoline usage--usage that causes undesirables like CO2 emissions and smog

There is no proof that a tax such as this is "efficient." You have not supplied any definition as to how such a tax is "efficient." Nor do you explain how it is good for the economy. Such a tax might be good for government, which is already pulling in hefty surpluses, but it does not provide any framework as to how that revenue would be used to solve the issues you have outlined. For that reason, it looks exactly like a tax for the sake of taxing.

Concerning gasoline usage, rising prices do not automatically result in reductions in consumption. Because cars are often a necessity for many people, these individuals will continue to use their vehicles, eat the increased cost, and complain about it.

Enforcing better standards for automakers could work, but in order to make consumers want it, you need to make gas expensive. Let's face it: gas is cheap here, compared to the going rate around the world

"Consumers" are not mindless pups to be lead by the nose to the promised land. Most people will see through such a scheme and won't take too kindly to it. In actual fact, enforcing better standards HAS worked over the past thirty years, and worked very well. There is nothing wrong with enforcing new standards on emissions or fuel consumption. Nor is there an issue with providing incentives to automakers to pursue such technology and goals with a deadline in mind. If you want to tax, apply a penalty on purchases with respect to cars that have poor fuel efficiency. Put a very high cost on the initial purchase of a car that guzzles gasoline. Or simply put limits on what kinds of vehicles can be on the road when considering their fuel efficiencey (or lack there of).

The fuel and the vehicle should be separate issues.

 

[afransen]

That's why the auto industry is suggesting a gas tax. It does not affect them directly. It is the driver that carries this cost in such a scheme.

It makes the cost of automobile usage higher, which effectively increases the cost of a car, decreasing demand, all else equal. The feebate is really a clumsy, ineffective mechanism in comparison to the gasoline tax. Why? It requires the government to make decisions, something it is notoriously bad at. The market can decide such things more efficiently.

There is no proof that a tax such as this is "efficient." You have not supplied any definition as to how such a tax is "efficient." Nor do you explain how it is good for the economy.

This is based on the definition of the efficiency of a tax as measure of revenue generated for the government over the cost of tax on the economy. Some taxes are highly distortionary, and cause relatively large negative impacts on the economy while generating little revenue. Imagine a speed tax, involving the taxation of all vehicles travelling faster than 10 kph at the rate of $20,000 per kph over. Very little revenue would be collected as a result of the tax compared to the enormous negative implications for the economy.

Efficient taxes are better than inefficient taxes (as I'm sure you'll agree). This is why efficient taxes like consumption taxes (which includes gasoline taxes, sales taxes, etc.) are better than inefficient taxes (such as income taxes). You can also compensate people who would be overly negatively impacted by such taxes, as is done with the GST rebate. Rural residents can receive a gasoline tax rebate as well, which they can choose to spend on gasoline or something else.

Such a tax might be good for government, which is already pulling in hefty surpluses,

Irrelevant. I'm not suggesting increasing overall taxation, just shifting the tax burden from inefficient taxes (such as income or investment taxes) to efficient taxes (consumption taxes).

but it does not provide any framework as to how that revenue would be used to solve the issues you have outlined. For that reason, it looks exactly like a tax for the sake of taxing.

Income tax is a tax for the sake of taxing. Gasoline tax decreases consumption, according to accepted economic theory...

Concerning gasoline usage, rising prices do not automatically result in reductions in consumption. Because cars are often a necessity for many people, these individuals will continue to use their vehicles, eat the increased cost, and complain about it.

Over the long term, it will. People will complain about the cost of gas. People will consider the high cost of gas when choosing their next vehicle, weighing the extra several thousand that SUV will cost them versus a sedan. The SUV that gets 30 mpg rather than 20 mpg will be preferred. So, frankly, your claim that rising prices do not cause decreases in consumption, (all else equal), is what needs to be defended.

"Consumers" are not mindless pups to be lead by the nose to the promised land. Most people will see through such a scheme and won't take too kindly to it.

Come again? Why should rely more on taxes that penalise good things (income) and less on taxes for things that are 'bad' (like gasoline consumption). Why would consumers give a damn how they are taxed? A gasoline tax allows them to choose how much tax they will pay, while no one would choose to earn less money in order to pay less income tax (though income tax makes the reward from earning more less than it would otherwise be).

In actual fact, enforcing better standards HAS worked over the past thirty years, and worked very well.

I suppose, but the rest of the world has outperformed North America in increasing fuel efficiency... This is not an argument against fuel taxes.

There is nothing wrong with enforcing new standards on emissions or fuel consumption.

Total agreement.

Nor is there an issue with providing incentives to automakers to pursue such technology and goals with a deadline in mind.

Total disagreement. Providing incentives could translate to the government paying them to do so. I think that is a really bad idea, since it tends to rely on government making decisions, something it is bad at.

If you want to tax, apply a penalty on purchases with respect to cars that have poor fuel efficiency.

Exactly: a gasoline consumption tax.

Put a very high cost on the initial purchase of a car that guzzles gasoline.

What if that vehicle is owned by someone who drives very little? Should we be penalising that person, who drives very little, and rewarding the person that drives a lot? That seems utterly illogical to me.

The fuel and the vehicle should be separate issues.

I suppose I agree, though I don't think you understand the implication. Consumption of fuel is the 'bad', not one car versus another. A gas guzzler is generally no worse for the environment than a typical car, besides the fact that it consumes more fuel. Why focus on the vehicle, when the consumption of the fuel is the problem?

 

[Hydrogen]

It makes the cost of automobile usage higher, which effectively increases the cost of a car, decreasing demand, all else equal. The feebate is really a clumsy, ineffective mechanism in comparison to the gasoline tax. Why? It requires the government to make decisions, something it is notoriously bad at. The market can decide such things more efficiently.

The difficulty is that this tax creates an artificial pressure on an existing form of transportation that has become crucial if not even essential for a huge number of people. Such a tax also lets automobile manufacturers off the hook in terms of technological development and improvement in efficiencies. They can, in essence, "pass the buck" onto the car user.

As for feebates or incentives, they are only as good as they are managed. Setting standards need not result in failure, and many market "results" can appear efficient on a macro level while performing poorly on a micro level of measurement. Need I point out that periodic increases in gas prices have not lead to a mass decrease in automobile usage. Improving and enforcing emission standards and the like will deliver in terms of improved fuel consumption and emission reduction. Every car on the road today is a proof of this.

This is based on the definition of the efficiency of a tax as measure of revenue generated for the government over the cost of tax on the economy.

Yes, it would be efficient in terms of raising revenues, but as I pointed out above, there is no proof that it will bring a great reduction in automobile usage and the assumed reduction in emissions. Moreover, it is an open-ended form of tax collection with no particular aim or solution. Raising revenues for the sake of raising revenues is old hat and undirected. It does not actually go to solving any problems directly, but operates on an assumption that something might get solved downstream.

Irrelevant. I'm not suggesting increasing overall taxation, just shifting the tax burden from inefficient taxes (such as income or investment taxes) to efficient taxes (consumption taxes).

I'm suggesting direct investment in problem-solving, which is hardly irrelevant. I'm suggesting attacking the problem at its source while recognizing that automobiles are a reality, and that if one wants to improve on fuel consumption and emission reductions then one should focus on the technology.

As for shifting the tax burden, that burden just moves on down the line, and will be reflected in transportation costs, supply costs, the production of goods, the transportation of goods, and the cost of food. In this case, one consumption tax is everyone's consumption tax. I don't see any efficiency here.

Gasoline tax decreases consumption, according to accepted economic theory...

Economic theory should not be quoted like physical law. Increasing fuel costs does not explain the growing number of automobiles. And fine if you want to point out that all taxes are not even the world over, but the baseline price of oil is higher than it once was.

People will consider the high cost of gas when choosing their next vehicle, weighing the extra several thousand that SUV will cost them versus a sedan. The SUV that gets 30 mpg rather than 20 mpg will be preferred. So, frankly, your claim that rising prices do not cause decreases in consumption, (all else equal), is what needs to be defended.

Please note that you are expressing yourself in the future tense. What people will do is yet to be seen. While many people may choose vehicles with better fuel efficiency, the point is that these vehicles are the product of increases in technological improvement, and that these efficiencies must be constantly improved. As I pointed out above, the number of vehicles is increasing globally and showing no sign of halting. If fuel consumption and emissions are to be addressed directly, then the issue is technological and not taxation.

Come again? Why should rely more on taxes that penalise good things (income) and less on taxes for things that are 'bad' (like gasoline consumption). Why would consumers give a damn how they are taxed? A gasoline tax allows them to choose how much tax they will pay, while no one would choose to earn less money in order to pay less income tax (though income tax makes the reward from earning more less than it would otherwise be).

I'm not discussing income taxes. Your mixing apples and oranges here. As for gasoline being bad, it is actually considered a "good" in terms of its numerous economic effects (given what it provides modern societies). As for consumers choosing how much tax they pay, that's an easy statement to make. But take a look at what it can mean for the consumer and suddenly one can see that the "choice" you suggest is a rather slippery notion. But getting away from the taxation notion for a moment, why not pursue efficiencies in terms of fuel consumption, emission standards and their regulation now, and eventually be able to skip a big chunk of the tax debate while reducing fuel consumption and pollution?

Total disagreement. Providing incentives could translate to the government paying them to do so

Governments all around the world provide incentives to automobile producers in order to set up factories in their jurisdiction in order to create jobs. Why not provide ongoing, aggressive and competitive incentives to improve technologies that will provide direct measurable reductions in fuel consumption and pollution emissions?

What if that vehicle is owned by someone who drives very little? Should we be penalising that person, who drives very little, and rewarding the person that drives a lot? That seems utterly illogical to me.

Why penalize the person who has to drive? Whe penalize others who may receive the higher costs passed on to them (taxis, delivery vehicles)? Why penalize the person who has already bought a fuel efficient car? There is no perfect answer.

I suppose I agree, though I don't think you understand the implication. Consumption of fuel is the 'bad', not one car versus another. A gas guzzler is generally no worse for the environment than a typical car, besides the fact that it consumes more fuel. Why focus on the vehicle, when the consumption of the fuel is the problem?

So if the consumption of the fuel is bad, then why not attack the problem directly? Why go for an indirect "solution" like a tax that offers no long term fix to issues of emissions or improvement to fuel consumption. Why not aim directly at generating significant improvements in engine technology?

 

[afransen]

The difficulty is that this tax creates an artificial pressure on an existing form of transportation that has become crucial if not even essential for a huge number of people.

Aren't all taxes artificial. You should also keep in mind that we presently have a 24.7 cent per litre gasoline tax. Do you think this tax should be eliminated, since you seem to be arguing so strenuously against increasing it? If so, what should it be replaced with? If not, why is 24.7 cents/L acceptable, but no more?

Such a tax also lets automobile manufacturers off the hook in terms of technological development and improvement in efficiencies. They can, in essence, "pass the buck" onto the car user.

I suppose, but then the car user will 'pass the buck' to companies that make cars that satisfy their needs, like Toyota and Honda's compact/hybrid line. We are already seeing this, and this transition is essentially the goal of the feebate, where only two Toyota models currently qualify for a subsidy.

As for feebates or incentives, they are only as good as they are managed.

Agreed. Government also tends to be quite bad at making such managerial decisions, not to mention resist the powerful lobbying forces of auto makers as far as which models are subsidized and which taxed.

Setting standards need not result in failure, and many market "results" can appear efficient on a macro level while performing poorly on a micro level of measurement. Need I point out that periodic increases in gas prices have not lead to a mass decrease in automobile usage.

It has decreased consumption relative to the hypothetical scenario where everything else is the same and gasoline was cheaper. Yes, gasoline consumption went up despite price increases, but it probably didn't go up as much as it would have had the price not increased. There is statistical evidence to this effect produced in the US, if not here as well.

Improving and enforcing emission standards and the like will deliver in terms of improved fuel consumption and emission reduction. Every car on the road today is a proof of this.

Perhaps, but this isn't an argument against fuel taxes.

Yes, it would be efficient in terms of raising revenues, but as I pointed out above, there is no proof that it will bring a great reduction in automobile usage and the assumed reduction in emissions.

You're making quite a strong statement here, arguing that there is no evidence to suggest that increased gasoline cost would not result in decreased consumption, all else equal. What proof do you provide to back up this claim?

Moreover, it is an open-ended form of tax collection with no particular aim or solution.

It's aim is very clear: to reduce gasoline consumption and compensate for the negative externalities associated with gasoline consumption: GHG emissions, congestion, smog, etc.

Raising revenues for the sake of raising revenues is old hat and undirected. It does not actually go to solving any problems directly, but operates on an assumption that something might get solved downstream.

Almost every economist you ask would agree that gasoline taxes are a more effective mechanism to reduce gasoline consumption than a feebate or regulation alone. This isn't to say that there shouldn't be regulation, as that is relatively low cost...

I'm suggesting direct investment in problem-solving, which is hardly irrelevant.

Why should government choose which technologies to invest in? Again, government is bad at decision-making and picking winners. A better alternative would be to provide an incentive scheme for industry to invest in new, fuel saving technologies.

I'm suggesting attacking the problem at its source while recognizing that automobiles are a reality, and that if one wants to improve on fuel consumption and emission reductions then one should focus on the technology.

That tax is already here... And no one is talking about getting rid of cars. Of course they are vital. Drawing the above conclusion implies that income tax is an attempt to eliminate incomes (hardly the case!).

As for shifting the tax burden, that burden just moves on down the line, and will be reflected in transportation costs, supply costs, the production of goods, the transportation of goods, and the cost of food. In this case, one consumption tax is everyone's consumption tax. I don't see any efficiency here.

The efficiency comes in that those companies that want to make more money will find ways to do the same amount of moving and shaking using less fuel, or a fuel other than gasoline. Competition forces firms to find these kinds of cost savings. Just like how Wal-Mart is working to upgrade its fleet of transports to significantly reduce fuel consumption, largely sparked by the rising cost of fuel.

Economic theory should not be quoted like physical law.

Sure, our economic theory isn't perfect. But then again, neither is our theory of physics. They both have their nagging flaws. I'll agree that economics is a bit shakier, mainly because it models rather more complex systems, but there is not so stark a difference as you suggest. Now, if you said mathematics instead of physics, you might have a point...

Increasing fuel costs does not explain the growing number of automobiles.

Good point. That is because the number of automobiles is not simply a function of gasoline cost. It is also a function of many other things, such as the availability of roads, the cost of cars, number of persons with an annual income over a certain level, etc. It might be interesting to do some statistical analysis on... Nonetheless, it is fairly clear that if gasoline cost 1 penny per litre rather than 1 dollar per litre, our consumption would be much higher!

Please note that you are expressing yourself in the future tense. What people will do is yet to be seen. While many people may choose vehicles with better fuel efficiency, the point is that these vehicles are the product of increases in technological improvement, and that these efficiencies must be constantly improved.

I hope you understand that I'm not arguing against technological improvement. What I am arguing is that it makes more sense to cause the public to demand more fuel efficient cars through relatively higher gasoline prices rather than arbitrary rebates. The former generates tax revenue that can be used to provide useful public goods, while the latter requires vast sums to be diverted from public goods into subsidizing the purchase of vehicles.

As I pointed out above, the number of vehicles is increasing globally and showing no sign of halting. If fuel consumption and emissions are to be addressed directly, then the issue is technological and not taxation.

They go hand in glove!

I'm not discussing income taxes. Your mixing apples and oranges here. As for gasoline being bad, it is actually considered a "good" in terms of its numerous economic effects (given what it provides modern societies).

Gasoline is not the benefit. The benefit is transportation. If transportation can be accomplished using less gasoline or something other than gasoline (hopefully more environmentally sound), the more the better! That is what a tax on gasoline accomplishes, according to accepted economic theory (and if you want to quibble with economic theory, go talk to some PhDs who have a far better grasp of this subject than either of us).

As for consumers choosing how much tax they pay, that's an easy statement to make. But take a look at what it can mean for the consumer and suddenly one can see that the "choice" you suggest is a rather slippery notion.

If people don't mind paying the tax if it means they get to use their gloriously inefficient SUV or luxury sedan, that is their right. If people would rather not pay the tax, they can reduce their consumption by buying a more fuel efficient vehicle, or changing their driving habits, or both. That is the choice. It really does exist. People make it today, as we already have a gasoline consumption tax...

But getting away from the taxation notion for a moment, why not pursue efficiencies in terms of fuel consumption, emission standards and their regulation now, and eventually be able to skip a big chunk of the tax debate while reducing fuel consumption and pollution?

They're largely independent topics. I don't argue against regulation. But more effective would be a tax on gasoline. It would end up giving people more choice. You suggest that we should take away those gloriously inefficient luxury sedans and SUVs, while I say that if people want them, they should be able to have them, but pay a hefty price for the privelege.

Governments all around the world provide incentives to automobile producers in order to set up factories in their jurisdiction in order to create jobs. Why not provide ongoing, aggressive and competitive incentives to improve technologies that will provide direct measurable reductions in fuel consumption and pollution emissions?

Buying jobs should only be done if it results in a net positive cash flow for government. That is, the net tax generated by the new plant exceeds the cost of attracting the plant. 'Buying' more fuel efficient vehicles through subsidies is essentially paying auto companies for performing research they would perform anyway, in response to rising fuel costs...

Why penalize the person who has to drive?

They choose to drive. That choice results in negative externalities such as GHG emissions, smog, and congestion. That is why they should be penalised.

Whe penalize others who may receive the higher costs passed on to them (taxis, delivery vehicles)?

They aren't being penalised. Their tax burden is unchanged, since the increase in fuel taxes (which is absorbed into the cost of goods) is offset by decreases in income taxes, let's say, or increases in things like the GST rebate. The effect ought to be revenue neutral... Some may be more adversely affected while others would benefit.

Why penalize the person who has already bought a fuel efficient car? There is no perfect answer.

That person is rewarded handsomely relative to the person who bought the gas guzzling SUV. The person who bought the SUV will pay more tax...

 

[Hydrogen]

Aren't all taxes artificial. You should also keep in mind that we presently have a 24.7 cent per litre gasoline tax. Do you think this tax should be eliminated, since you seem to be arguing so strenuously against increasing it? If so, what should it be replaced with? If not, why is 24.7 cents/L acceptable, but no more?

Of course all taxes are artificial, and so are the judgements as to whether they are brilliant or not! As to your question, I have not suggested eliminating taxes, but you are suggesting increasing them. You also forgot the GST and PST, which are consumption taxes (already). Taxes on gasoline differ from province to province as well. Just how many taxes do you want to see applied?

Government also tends to be quite bad at making such managerial decisions, not to mention resist the powerful lobbying forces of auto makers as far as which models are subsidized and which taxed.

Yes, and wildly varying gasoline prices at the pump suggest price-fixing on the part of fuel suppliers. So much for a casual belief that the marketplace alone is the best place to determine these things. Do remember, the automobile companies want the rebate provision removed because it serves as a means of identifying fuel-efficient cars!

It has decreased consumption relative to the hypothetical scenario where everything else is the same and gasoline was cheaper. Yes, gasoline consumption went up despite price increases, but it probably didn't go up as much as it would have had the price not increased.

Hypothetical scenario? Gasoline consumption went up despite increases in the price. That was the reality. No one actually knows what happens in the world of alternate scenarios.

Perhaps, but this isn't an argument against fuel taxes.

And fuel taxes are not a solution to the problems of fuel efficiency and emissions reduction. Technological improvement that increase fuel efficiency and reduce emissions are solutions. Cars are not going away; so we may as well improve on them. And since cars are not going away, any manufacturer that can bring affordable improvements to their products won't have much to fear.

You're making quite a strong statement here, arguing that there is no evidence to suggest that increased gasoline cost would not result in decreased consumption, all else equal. What proof do you provide to back up this claim?

Easy. There are more cars on the road than ever before. In North America there are more second and third car households than ever before. Gasoline is more expensive than it was before the 1970's, and taxed considerably more than at that period of time. The engines of today produce far less in terms of emissions than those of the 1970's and are far more fuel efficient. Taxes didn't do this. Government selection of fuel efficiency values did, as did governmnet bans on lead and sulphur in gasoline, and the mandating of catalytic converters.

Why should government choose which technologies to invest in? Again, government is bad at decision-making and picking winners. A better alternative would be to provide an incentive scheme for industry to invest in new, fuel saving technologies.

I never said government should choose any specific technology. However, governments are encouraging the use of flourescent light bulbs as energy savers and considering banning the sale of incandescent bulbs. An improved technology is, in effect, being selected - one in which the government had no hand in developing.

Also, a blanket statement such as "governments are bad at decsion-making" is just a bit over the top. If you think that they are so bad at decision-making, why in the world would you want to hand them over a huge pile of money derived from a new gasoline tax? "Government decisons" have, for example, pushed automobile manufacturers to greatly improve fuel efficiency, reduce pollution emissions, improve safety and consumer protection. Are governments perfect? No. But just imagine the state of affairs had the automobile manufacturers been left to their own devices on these issues.

Gasoline is not the benefit. The benefit is transportation. If transportation can be accomplished using less gasoline or something other than gasoline (hopefully more environmentally sound), the more the better! That is what a tax on gasoline accomplishes, according to accepted economic theory (and if you want to quibble with economic theory, go talk to some PhDs who have a far better grasp of this subject than either of us).

Okay, gasoline is a good in that enables transportation. It has enabled motor cycles, automobiles and airplanes. Sure, it has enabled idiotic leaf-blowers as well. But I am sure that there are better technologies for this as well. Is it time to actively pursue a replacement to gasoline? Yes, this is underway. In the meantime, why not improve the existing technology all the while respecting the important economic role of inexpensive energy. We can have the best of both world: cleaner and cheaper.

As for gasoline taxes accomplishing something according to accepted economic theory, I don't buy it. And I don't easily agree to "arguments from authority" either. There is much more to the scenario of raising taxes than meets the eye, and it is case dependent. So grand rules don't always apply. Gasoline is more expensive and taxed more now than in the past. Yet there are more automobiles on the road per capita than in the past.

I just happen to think that if one really wants to attack problems such as lowering emissions and improving fuel consumption, then one should attack the problem directly. Taxing gasoline is not direct. Sulphur and lead were removed from gasoline by direct action; removal was not a product of tax-tinkering.

As we are at risk of repeating points back and forth (and I think this has already happened), let us agree to disagree - if that is okay with you. The fundamental point still stands: there is plenty of room to bring about improvements in terms of fuel efficiency and emsission standards. We can at least agree on that.