Articles on increasing carbon taxes, such as the tax on gasoline, in order to reduce fuel consumption. Reducing fuel consumption would reduce greenhouse gas emissions, reduce pollution, reduce road congestion, and may reduce dependency on foreign oil. But at what economic cost?
Taxing Vehicle Miles Traveled by Taxing Tires
An examination of the Liberal Party of Canada and Green Party of Canada carbon tax plans. Do their numbers add up?
A review of the carbon tax plan put forward by the Green Party of Canada.
A review of the carbon tax plan put forward by the Liberal Party of Canada.
An examination of climate change skeptic - Ross McKitrick's proposal for a carbon tax rate that varies with temperature.
Discussing a policy proposal - "A Green Employment Tax Swap: Using a Carbon Tax to Finance Payroll Tax Relief". While a good policy overall, it is likely not the best approach in implementing a carbon tax.
I discuss the merits of higher carbon taxes on non-Pigovian grounds.
An answer to the question: "Why should an economist support such a political infeasible thing as a gas tax? "
An answer to the question: "How is a gas tax better than just improving emissions standards?"
An answer to the question: "How long would it take for a gas tax to be effective?"
An answer to the question: "How do we know that governments will not just spend the additional revenue from a gas tax?"
An answer to the question: "How can we be sure the government would use the additional revenue to offset other taxes?"
An answer to the question: "How would a gas tax reduce consumption by enough to make it worthwhile?"
An answer to the question: "How would a gas tax reduce road congestion?"
In response to a number of questions posed by reader Garth Brazelton on the issue of gas taxes and the Pigou Club, I've decided to create this list of frequently asked questions. The answers in this gas tax FAQ reflect the problem from my perspective - I suspect many readers will disagree with some (or possibly all of my answers).
How would a gas tax reduce consumption?
Like Dr. Greg Mankiw, I am also a big fan of Pigovian taxes. He quite rightfully points out that they "allow us to correct market failures without heavy-handed regulations, while raising government revenue so we can reduce more distortionary forms of taxation." So like Mankiw, I'm a supporter of the aims of the Pigou Club.
Added revenue will allow the government to waste even more money on pork-barrel projects. This is related to the idea of the Starve the Beast theory of government spending, where tax cuts today will cause spending cuts tomorrow. If we raise additional tax money today, won't government just spend it all tomorrow?
There have been a number of comments in response to Pigou Club ideas, in e-mails and on blogs such as Dr. Mankiw's such as: "I am going to insist again that it has not been (even roughly) shown that gas taxes are sub-Pigovian at current levels."
We do not have to just theorize about how people may respond to a rise in gas hikes, we can look at studies which determine what the price elasticity of demand for gasoline is.
Once again, Terence Corcoran of the Financial Post (Canada) has published criticism of the aims of the Pigou Club. See: Big new push for new gas taxes. I like the fact that Corcoran is asking tough, intelligent questions about taxes on fossil fuels. They're important to address.
A couple months ago I wrote Pigovian Taxes - Joining the Pigou Club which discusses the idea of increasing taxes on activities with negative externalities, such as the use of fossil fuels, and decreasing taxes which harm hard work and innovation. There's been a great number of articles on the aims of the Pigou Club in the media lately, such as:
I'm not sure how many of you are members of Facebook (I wasn't until yesterday). Anyhow Kevin Burke has started what Greg Mankiw is calling the "facebook arm of the Pigou Club". If you'd like to check it out or join (it's free), see Pigou Club at Facebook.
I was reading through an old copy of Friedman's Free to Choose the other day. From this statement, it suggests that Milton Friedman might be a good candidate for the Pigou Club.
A couple months ago I wrote Pigovian Taxes - Joining the Pigou Club which discusses the idea of increasing taxes on activities with negative externalities, such as the use of fossil fuels, and decreasing taxes which harm hard work and innovation. There's a couple of new articles out on the Pigou Club.
Prof. Greg Mankiw spotted an article about the Pigou club in the New York Times. See it at: Raise the Gasoline Tax? Funny, It Doesn’t Sound Republican.
