August 27, 2009

Green energy = More taxes?

The Obama administration is focused on green energy, or "clean" energy programs that make America more efficient and reduce our dependence on foreign oil. For instance, the current administration has provided billions in subsidies/funding for domestic automakers to provide new technology and more fuel efficient vehicles by requiring that the average mpg on vehicles be increased by 30%. This means that the American people will consume less gas at the pump, and drive further on a tank of gas. And as electric vehicles and bio fuels come to market, some of us won't use gasoline at all.

This is where the potential dilemma comes into play. As we drive more fuel efficient vehicles and consume less gas at the pump - the government receives less tax revenues for improvements to infrastructure such as roads, bridges, highways, etc. Currently, the federal gas tax is 18.4 cents per gallon (unchanged since 1993) of gasoline that is pumped in the United States. According to the Department of Energy, it is estimated that we consume approximately 378 million gallons of gas per day. Multiply this by $.184 and our government receives approximately $69,552,000 in tax revenues every day!

But again, as Americans drive more fuel efficient cars and therefore consume less gas, there will be less money coming in from federal gas taxes for improvement in our infrastructure. Eventually politicians will become aware to this decline in tax revenues and will have to find a way to keep the money rolling in, so they can fund the necessary projects to improve our infrastructure...and that they might be re-elected into office.

Maybe the government will choose to increase taxes on our utility bills as "plug in" vehicles become more popular? Or perhaps the government will employ a "mileage tax" to increase revenues by taxing people who take long road trips for vacations? Or since the average person commutes up to 30 miles Monday-Friday for work - maybe a mileage tax is a viable option? Or perhaps the government will just simply increase the current federal gas tax to, say $.50 cents a gallon?

In summary, what I'm saying is although vehicles with "better gas mileage" are better for the environment and takes less gas to fill up - they may still cost us more money in the end.