The Seattle Post-Intelligencer today proposes an increase in the Washington State gas tax as a way to pay for increased infrastructure costs, but the editors also propose to make the tax increase temporary and "flexible." That is, the tax increase would be removed when gasoline prices get back to where they were six months ago. Think of it as a temporary "windfall" tax on consumers who are benefitting from gas prices that are under $2.00.
Low prices at the pump keep us dependent on foreign oil and retard investment in alternative fuels and technologies. A per-gallon tax increase reverses some of those influences. In a recession it also can be justified as a way to pay for much-needed infrastructure improvement and to provide revenue to offset cuts in other taxes. The tax cuts especially should be tied to increasing investments in new industries and jobs.
I privately advocated this idea for several years, but finally abandoned it a few months ago, thinking high prices were here to stay. But now it makes sense again. The question is whether the temporary tax increase is really tied to prices below, say, $3--so consumers don't get gouged when prices rise again, which they will. The danger, of course, is that government will make the tax increase permanent. A sunset provision at least would make that less likely.
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