Greenspan leaves DC, backs “elegant” gas tax

Daniel Gross reported in the Times recently that Alan Greenspan, freed from having to tell his Washington masters what they wanted to hear (whoever thought that he was the supreme overlord?) has shown the true colors of a good economist and come out as a geo-green:

Mr. Greenspan was hardly a proponent of raising taxes on energy to encourage conservation, a policy prescription generally associated with the politicians and economists of the left.

Until now. In late September, as he spoke to a group of business executives in Massachusetts, a question was posed as to whether he’d like to see an increase in the federal gasoline tax, which has stood at 18.4 cents a gallon since 1993. “Yes, I would,” Mr. Greenspan responded with atypical clarity. “That’s the way to get consumption down. It’s a national security issue.”

Gross also mentions that N. Gregory Mankiw, the guy who as a Bush economics advisor squirmed while Bush ads attacked Kerry for wanting to raise gas taxes, keeps a Pigou Club list of economists who’ve come out in favor of Pigouvian taxes. Of course, no sitting politicians in a position to do such a thing are on that list. Oh well.

Of course, the Pigouvian tax that’s perhaps even more elegant (when combined, perhaps, with a vehicle weight tax, payable at annual registration or emissions check) is a property tax on parking spaces, or effectively a tax on car trips. Such a tax does a better job at discouraging short car trips (the most environmentally destructive and the easiest to divert to other modes) than even a straight VMT tax, and since the evidence is rather hard to hide, it can be levied with some ease.

Such a tax (the first I’ve heard of) was recently implemented, in fact, by Vancouver’s comprehensive transportation authority [manages both roads and transit] over fierce opposition from some businesses. (A nice policy summary of the tax. Note: “strata” is a B.C. legal term comparable to “condominium.”) Apparently, upon further research, such taxes were proposed but not implemented in Montgomery County (sec. II-3) in 1990 and for metropolitan DC in 2002 — although making it as far as the County Executive (i.e., mayor) in Montgomery.

The Vancouver opponents charge that it’s more properly “a pavement tax”, which might make even more sense: a clear nexus emerges with regard to stormwater, and the tax levy could be calculated just by plugging aerial photos into a computer.

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