Paterson picks wrong way to tax gasoline

The governor's budget would repeal the sales tax cap on motor fuel, which now stands at 8 cents per gallon. State sales tax is now 4 percent, which means you would pay 8 cents tax if gasoline cost $2 per gallon.  But gas costs less than that now, so the governor's measure would not raise any revenue unless prices rose. And the more they do rise, say to $4 and more as they did recently, the more in tax consumers would also have to pay. It doesn't make any sense to hit people over the head with higher taxes at the same time as they are being hammered with higher prices. Something else that does not make sense is the magical thinking in the governor's budget, where it says: "There is no demonstrated evidence that this cap provides savings that are passed on to consumers." The highly dubious idea is that since the tax is imposed on wholesalers, it does not necessarily translate into higher prices for motorists at the fuel pump.

There is a case for raising gas taxes when, as now, prices are low and the state is in urgent need of revenue. But it should not be done by lifting the sales tax cap, which links the tax to the price. Better to impose a per-unit excise tax, putting an extra nickel or dime on the price of gasoline.

Comments

[akaGaGa]

I have another idea, one that politicians don't often think of - cut spending! That's how us peons have to balance our budgets, as we don't often have the option of "increasing revenues" by forcing someone else to pay our bills.