The federal government, along with several state transportation departments around the country, are proposing a switch from the decades long gasoline tax, which drivers pay at the pump, to a new tax based on miles driven. This new proposal is intrinsically tied to the Obama administration’s push towards hybrid and higher mileage cars, which have helped to create less consumption, and a decrease in the overall tax revenues collected from gasoline sold.
On Jan. 14, Catherine Austin-Fitts appeared as a news guest on the Coast to Coast AM radio show, and agreed with host George Norry that the over-regulation of automobiles by President Obama, has been the primary catalyst that created the side effect of lower revenues for the government, and is now the basis for creating a new taxation program that will inevitably cost more for nearly every driver in America.
Geroge Norry: An on again, off again move by the Obama administration to scrap the Federal gas tax, which we all pay for when we go to the pump, in favor of a pay per mile fee would boost the tab to Americans as high as 250%. Raising their current tax of $0.184 per gallon, to possibly as high as $0.46 according to a new government study.
But without a tax increase, the government accountability office study says that the government’s highway fund will go dry. One reason the fund is going broke… President Obama’s push for fuel efficient cars, which has resulted in better mileage, but fewer stops at the pump.
Catherine Austin-Fitts is with us here… well, this is an interesting paradox here. Would you pay per mile? How would they administer that?
Catherine Austin-Fitts: George (laughs), I don’t know here. When you over-regulate and over-tax something shrinks. And sometimes, raising taxes can lower revenues. It’s called the elasticity of demand. – Coast to Coast AM, Jan. 14
The concept of elasticity of demand has a perfect example in the nation’s push to stop smoking through raising taxes on the product of cigarettes. Since 2002, when State and Federal courts began to rule against the tobacco industry, local and national governments began to impose draconian taxes on packages and cartons of cigarettes, in the hope of lowering the number of smokers nationwide. This program was highly successful, as the percentage of smokers in the entire U.S. population fell from 23% in 1997, to 19.3% in 2012.
However, as the pull for more revenues by state and national governments increased, the golden goose of easy money through increasing cigarette taxes multiple times led to the opposite effect for government coffers. When the number of smokers in the U.S. was over 20%, cigarette tax revenues accounted for nearly 40% of the total cost of a package of cigarettes, and an annual collection of $14,974,713,000 in 2006 alone. However, these revenues peaked in 2009 as numerous tax increases on cigarettes forced many lower income Americans to quit purchasing them, and give up the habit.