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Home Front Economy

Remove Federal Gas Tax on Alternate Fuels to encourge their production and sales.

2006-05-20

Proposal:

Encourage the growth of US made alternate fuels in the US by a graduated reduction in the federal fuel tax. (currently: 18.4 cents/gal)

Logic:
The current fuel tax is a usage fee put into the transportation and roads fund. This fund is usually raided by entitlements and the money never put back in. Therefore, lowering the tax for alternate fuels is not impacting the transportation fund at all. It just makes a smaller pot for out of control entitlements to rob. This proposal would provide incentive to increase home produced energy and force some of the more out of control entitlements to experience a little restraint.

Examples:
So if bio-diesel or 100% ethanol or gas synthesized from say coal or shale were in a pump the cost would be at least 18.4cents less than oil products would have to pay.

If you had F-85 it would get a discount of 2.76 cents/gal in federal gas tax.

Benefits:
It cost the government nothing, encourages creation of alternate fuel at the expense of imports and imposes a tiny bit of fiscal restraint on raiding of a trust fund.

Posted by:3dc

#5 Frank G.

Yes there are egregious cases of enviros blackmailing highway agencies into provided gold plated mitigation or requiring 4 acres created for every 1 acre taken.

Notwithstanding this, do you really feel both the fed and state gas tax should be repealed?

Posted by: mhw 2006-05-20 23:58

#4 MHW - I deal with this every friggin day. The enviros got approval for the gastax funds to help pay for environmental mitigation. Guess what? Our "banked" acreage purchase cost doubled - due to big moneybags.

Posted by: Frank G 2006-05-20 22:33

#3 The Highway Trust Fund is not raided by entitlements, if by entitlements you mean social security, medicare, welfare stamps, etc.

It does fund a lot of non highway projects, e.g., public transit, some historical preservation, wetland creation, landscaping, etc.

It also funds some awful projects (e.g., the Young/stevens bridge in Alaska).

However, if most of the fund does go to highway improvement.

Posted by: mhw 2006-05-20 21:46

#2 Problem with US drilled oil is I didn't see how to tell the difference by inspection at the pump. It's easier to address that by other incentives.

Unfortunately our House and Senate appear to be populated by refugees from the "short bus".

Posted by: 3dc 2006-05-20 12:47

#1 Here's a novel extension:

Extend this to oil that's drilled for in the United States.

Currently the House just introduced a set of financial incentives to decreace the amount of new drilling in the US.

And yes, this ties into "alternate fuels" too. How are you going to get any large institutional investors to invest in any sort of grand alternate energy scheme when you're providing disincentives to local drilling and scapegoating anyone who does?

Posted by: Phil 2006-05-20 11:46

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