TIME: Almanac 1995

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<text id=93TT0249> <title> July 26, 1993: Money Angles </title> <history> TIME--The Weekly Newsmagazine--1993 July 26, 1993 The Flood Of '93 </history> <article> <source>Time Magazine</source> <hdr> Money Angles, Page 53 A Tax Increase You Can Avoid </hdr> <body> By Andrew Tobias Most people say they'd be willing to pay their share to cut the deficit, but then, when a share is proposed for them to pay, they go nuts. Like the woman I saw on TV, informed of the Senate's proposed 4.3 cents-per-gal. gas-tax increase, who looked into the camera and said it would kill her. Well, maybe she said, "It would be a killer." But the point was clear to any Congressman who happened to be watching: over her dead body. No one, presumably, had taken the time to help her calculate what 4.3 cents per gal. means. To a typical driver (12,000 miles a year at 20 miles to the gallon), it means $25.80 a year. Why is this national news? The real story is that the proposed gas tax is far too low. Because the essential thing to note about a gas tax is this: you don't have to pay it. You can drive just as far and as fast as you always did at no extra charge. You just have to do it a little more efficiently. Please understand: I'm not talking about carpooling. Carpooling is fine if you're a communist. Maybe even if you're not. But carpooling means having to cooperate with other people (I was never very good at this), having to talk with them (not before noon, please), having to give up control of the vehicle while you read or snooze (give up control?). Nor am I talking about inflating your tires or tuning your engine or driving more smoothly to get a 5% or 10% increase in fuel efficiency. You've already done that, or else you don't want to. I'm just talking about choosing a more efficient car next time you buy one. It's easy, given the natural march of technology, because whether you're a used-car buyer like me or a new-car buyer like my secretary, your next car will almost surely be newer than the one you drive now--and newer cars get better mileage than older ones. Say you bought a 1977 Buick a few years back that gets 14 miles to the gallon. If it gives up the ghost next year and you replace it with a 1985 model that gets 18 m.p.g., that's a 28% increase in fuel efficiency. They could hike the price of gas 28%, and it wouldn't cost you a penny more to drive a mile. Or say you now get 20 m.p.g. but could get 26 m.p.g. next time. That's a 30% boost in efficiency. If you already get 40 miles to the gallon, a 30% improvement means one day getting 52, which will certainly be possible. But even if you can't, the impact of a gas tax will fall lightly on you: you're not buying much gas. Obviously, few of us are planning to buy a car in the next few months. So if they raised the price of gas 50 cents next week, it would indeed be a killer. But phased in over five or 10 years? Whatever gradual gas-tax hikes are enacted, they can easily be canceled out by mileage gains. Before, it cost you, say, $12 in gasoline to drive 200 miles. Now they raise the tax--and it still costs you $12. How painful is that? Especially if it means taking a significant whack out of our $300 billion annual deficit? The only ones who really suffer from a higher gas tax are our friends the Saudis and Kuwaitis, who will sell us less oil. In a sense, they pay the tax. If only we could find a way to do this with income and property taxes! "There's only one problem with the Davies baby," ran the tag line for a particularly repulsive horror movie some years ago: "It's alive!" Well, there's only one problem with the 4.3 cents-per-gal. gas tax the Senate has proposed: it's too little. The House and Senate conferees, wrestling to reconcile their respective budget packages, should make one tiny little amendment. Where it says 4.3 cents, they should add two words: a year. And maybe a third word: forever. For decades, we'd still be paying vastly less for gas than our competitors (in Europe and Asia, gas goes for nearly $4 per gal.). For decades, the hike in the tax would be more or less canceled out by available improvements in fuel efficiency--so it would cost no more to drive a mile. With the average price of unleaded, self-service gas running around $1.15 per gal. this summer, a bit less than last year (that's right, less), a 4.3 cents hike in the gas tax would add about 3% to the price. All you'd have to do to keep your cost of driving level would be to improve your gasoline efficiency 3% a year to keep pace. Buy a car that gets 23 miles to the gallon, say, instead of 20, and you've beaten the gas tax for five years. Uncle Sam raises his lousy $70 billion over those five years, but your cost of driving a mile rises not one thin dime. Actually, Ross Perot, Paul Tsongas and Lee Iacocca--men of considerable popularity--have proposed even stiffer medicine. Presumably, the millions of Americans who consider themselves Perot-lees favor his 50 cents per gal. phased in over five years. But 4.3 cents a year forever wouldn't be half bad either. Remember: the alternative to trimming our deficit (not necessarily wiping it out, but trimming it) is the gradual decline of our country. The House-Senate conferees should play the relatively painless gas-tax card for all it's worth. </body> </article> </text>