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U.S. drivers getting a break on gasoline taxes

Published Oct. 9, 2005

Ah, France. The food is extraordinary and so is the tax on gasoline. In fact, taxes push the price of gasoline past $3 a gallon in almost every developed country _ with the notable exception of the United States.

Here, gasoline currently is running $1.12 or so a gallon, and Congress is finding it hard to swallow an additional tax of 7 or 8 cents. Senators from western states are balking at the tax because their constituents drive long distances. Truckers and the American Automobile Association are objecting, too.

Are American drivers spoiled? Many environmentalists think so. They want Congress to impose a tax on energy, including gasoline, to cut consumption of non-renewable fuels and cut the amount of pollutants going into the air.

In Europe, gasoline prices are the primary reason the average household logs about half the driving miles of most American households, according to a California scientist who has written a book on energy usage.

"In an international context, we look foolish because the rest of the world made this decision a long time ago," said Lee Schipper, co-author of Energy Efficiency and Human Activity.

Schipper says the recent popularity of pickup trucks and various other "macho machines" among suburbanites has cut into the energy savings that had resulted from federal fuel efficiency standards.

"The main difference (in Europe) is that they make fewer trips per day," Schipper said. "It's the number of small trips that is killing us, not this myth of the great wide open distances."

Cutting energy consumption was one of the reasons President Clinton called for a tax on British Thermal Units _ the Btu _ of energy content as part of his deficit-reduction package. The House went along with the Btu tax last month, after lawmakers carved exemptions in it for various industries.

The Btu tax would increase the price of a gallon of gasoline about 8 cents, in addition to bumping up the cost of utility bills and other energy. It would raise $72-billion over five years.

This week the Senate Finance Committee considers Clinton's budget package. The panel may replace the Btu tax with a tax of 5 cents to 7.3-cents a gallon on transportation fuels.

Sen. John Breaux, D-La., proposed the 7.3 cents-a-gallon tax after many industries and some oil-state lawmakers said the Btu tax would hurt business and be difficult to collect. Breaux's alternative tax would raise about $40-billion over five years.

In Florida, a 7.3 cents-a-gallon tax would cost the average motorist, who drives 15,000 miles a year, roughly $50 a year, according to Kevin Bakewell, a vice president at AAA Auto Club South.

Motorists in Florida already pay gas taxes of up to 22.6 cents a gallon imposed by the state and local governments. When added to the 14.1 cents-a-gallon federal tax on gasoline, Floridians pay up to 36.7 cents a gallon in taxes.

AAA is writing senators to complain that the transportation fuels tax is "designed to place a disproportionate burden of reducing the federal deficit on the backs of the nation's motorists."

The 34-million-member group complains the additional tax will affect the tourism and recreation industries. AAA estimates that 80 percent of Americans' travel is by motor vehicle.

Environmentalists aren't exactly thrilled with the transportation fuels tax, either, though their reluctance stems from another reason _ it probably isn't big enough to cut down considerably on energy consumption. That's why they preferred the broader-based Btu tax on most forms of energy.

"We don't believe that 7 cents a gallon or 8 cents a gallon by itself would have substantial environmental benefits, but it's a movement in the right direction," said Dan Lashof, a senior scientist with the National Resources Defense Council environmental group.

Most economists say Americans would simply pay the new gasoline tax rather than cut back on driving. The next time they buy a car, they might consider a more fuel-efficient vehicle, but it's not a certainty. As a result, air pollutants known as greenhouse gases wouldn't fall off nearly as much as if Congress imposed a Btu tax on most forms of energy.

"The smaller you make the tax, the less effect you're going to have on consumption," said Jane Gravelle, an economist with the Congressional Research Service at the Library of Congress.

Schipper, the energy scientist from California, says other countries turned to higher gasoline taxes to pay for their government services, just as the United States does. Of course, in many countries, the government provides an extensive mass transit system for commuters who can't afford to drive their own car.

How much is tax?

This chart shows the average price of a gallon of gas in several countries, and the percentage of the purchase price that comes from taxes.

Country Price+ Pct. of taxes

Austria $3.92 65.0%

Belgium $4.17 71.4%

Canada $1.82 45.6%

Denmark $3.87 67.8%

Finland $4.32 69.2%

France $4.04 77.1%

Germany $3.92 73.5%

Italy $5.20 76.1%

Japan $3.77 45.2%

Netherlands $4.56 73.7%

New Zealand $2.07 46.4%

Spain $3.94 70.3%

Sweden $4.77 68.9%

United Kingdom $3.72 69.6%

United States $1.16 32.4%

_ Sources: International Energy Agency, the Center for Global Change. +Prices from the third quarter of 1992.