Imagine 80 MPG?

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There is a big problem with high-mileage cars – from the point-of-view of the government.

Less revenue.

Imagine an 80 MPG car – which could be built right now, easily, with existing technology. (Several current European models are already pretty close to the 80 MPG bar.)

Such a car could cut the average person’s fuel costs by two-thirds – in effect, putting things back the way they were circa 1986, when gasoline still cost about $1 per gallon. It would do a great deal to ease the economic pressure bearing down on the average person. But if tens of millions of Americans were suddenly using two-thirds less fuel, they’d also be paying two-thirds less in motor fuels taxes.

You don’t have to be a conspiracy nut to wonder what effect contemplation of this possibility has had on government policy.

Even assuming the most benevolent, public spirited intentions, the situation is a debacle in the making. If revenue derived from motor fuels taxes declined by 20-30 percent, there would be that much less revenue available to maintain existing roads – and build new ones. Meanwhile, the population is galloping upward – more people, more cars. Where will the money come from to keep pace?

There is always the possibility of making up the shortfall some other way – but the beauty of the motor fuels tax, historically, is that it’s a largely hidden tax. The average motorist is not made to confront the bill in the same way that he’s made to confront, say, the sales tax on the food he buys after gassing up. Because unlike the food on which pays a tax in addition to the cost of the food itself, the motor fuels tax is discreetly folded into the cost of the fuel. One does not pay $2.40 a gallon – plus 80 cents per gallon in taxes. One just pays the $3.20 per gallon. Thus, “big oil” takes most of the heat – rather than big government.

Motor fuels taxes are regressive and confiscatory. Other than “sin taxes” on cigarettes, it’s hard to come up with a product – in the case of gas, a necessary staple – that is taxed at a rate equivalent to about 30 percent (or more) of the cost of the actual item itself. And unlike cigarettes, most of us have no choice about buying gas. It’s an ingenious trap that government has set for us: First, use taxes (in the form of tax incentives as well as the use of taxes as such) to fund artificial, unnatural growth – in particular, the artificial, unnatural growth of highways and other roads. Highways and roads that would not have been built until real demand – as opposed to government “stimulated” demand – made an economic case for their construction. The artificially induced roads encourage sprawl – more government subsidized “growth” – of homes and retail areas that, in turn, encourage more driving, more consumption, which in turn funds more artificial growth.

And the cycle is complete.

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Eric Peters [send him mail] is an automotive columnist and author of Automotive Atrocities and Road Hogs (2011). Visit his website.

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