Antidismal reports on Gregory Mankiw's suggestion of higher petrol taxes in exchange for lower income taxes. After driving to work in his Lincoln towncar, he says:
I would institute an immediate and permanent reduction in the
payroll tax, financed by a gradual, permanent, and substantial increase
in the gasoline tax. I would make the two tax changes equal in present
value, so while the package results in a short-run budget deficit,
there is no long-term budget impact.
There are several problems with this:
- Firstly no one believes the government when it says that it will reduce taxes in one area forever. In a few years, income tax will be back where it was, and we will still have the petrol taxes. In short, governments can't be trusted. For this reason, punters will quite rationally take any tax reduction offered, and oppose any tax increase
- Second, no one has shown that CO2 has anything to do with anything other than plant growth. Global warming is a scam
- Third, electric cars will erode this tax (admittedly only in the longer term)
- Fourth, people in the sticks who drive more miles are penalised. Those who live in cities and take the electric train will be subsidised even more by the poor country fold
- Fifth, it is a slippery slope from this to raising taxes on fatty food, airline travel, gas braziers, school trips and skiing. Or did I mention this already?
But wait. Mr Makiw says:
Call it the create-jobs, save-the-environment, reduce-traffic-congestion, budget-neutral tax shift.
This is also garbage. Recycled but still garbage. Mr Mankiw is just trying to sound cool and new-age by adding a bit of greenwash to his silly idea.
In the UK they have massive petrol taxes, such that even now it costs around $2.50 a litre for the stuff. The Economist claimed a few years ago that such taxes were twice what they should be for any reasonable value of 'economic externalities'. Yet there they are.
They don't even spend it on roads. But arguably the UK has the worst congestion, the crappiest living environment, a terrible job market and collapsing tax revenue. This is in addition to a one-eyed Scottish git for a PM, or whatever Jeremy Clarkson said.
Antidismal then says:
This last paragraph is important. Fiscal
stimulus will not fix what is wrong with the economy. It may help with
some of the symptoms but much greater reform is needed if we are to
deal with the actual causes of the current crisis.
One might argue that environmental regulations are a big brake on economic growth. One could suggest that skyrocketing land prices caused by green belt restrictions have created instability and speculation. One might even suggest that spending billions on global warming has sucked talent from real science in favour of the voodoo variety.
Reform is certainly needed. But while we have brilliant and highly respected economists proposing CO2 taxes, we in the human race deserve every crisis coming to us.