by Tyler_JC » Fri 27 Jun 2008, 16:15:24
$this->bbcode_second_pass_quote('Troyboy1208', 'A')lright so I have this stuff stewing around in my head. I have many questions and since we have so many well informed posters on this site, I figured I would go ahead an put them out there.
1. As prices rise there will be less and less vehicles on the road. How will this affect gas tax revenue? Where will the revenue come from?
2. If gas also has sales tax included what is that going to do to sales tax? How are municpalities going to make up that shortfall?
3. If people are not buying vehicles, and since vehicles are so expensive, what is that going to do to sales tax?
4. Do you foresee an increase in the number of speed traps and the like to provide extra income for municipalities?
5. Will there be an extra tax that is levied each year that you own an electric vehicle that you have to pay because you are not paying to use the roads?
If any of you feel there are other major ramifications to less vehicles being on the road feel free to post them here. Thanks.
1. Gas taxes will go up in order to compensate for the lower sales volumes. This will encourage people to consume less gasoline and lead to yet higher gas taxes. The price elasticity of demand for gasoline isn't perfect so we will reach some kind of equilibrium at $8 a gallon in a couple years (complete guess on that one).
2. Gas taxes pay for roads and bridges in the vast majority of states. Only a few states (California, Michigan, Illinois, Georgia and Hawaii and maybe another one) charge sales taxes on gasoline. I would not worry about sales tax revenue declines in response to reduced gasoline consumption. People will spend their money on other things so it's going to be a wash.
3. Again, people who stop buying cars will start buying something else. Cars are not taxed significantly heavier than computers or pillows. Car excise taxes are not a make or break for any government. I'd be more worried about the unemployed car salesmen.
4. Maybe? Does it matter? I don't speed and I don't worry about speed traps. Going faster than is necessary wastes gasoline and at $4 a gallon, I try not to waste a drop.
5. There is some talk of increasing tolls and I believe that that's how they plan on paying for the roads.