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Follow TURFPegging gas tax to inflation spells trouble for taxpayers
There has been much discussion through the years about raising the gas tax and indexing it to inflation to pay for roads. We've seen interest only from transportation leaders, but there has been no commitment by these same leaders to end the reliance on tolling along with it. We've said all along, end the diversions of the gas tax to non-road purposes and put the lid on tolling first before there's ANY discussion about raising the gas tax. Indexing would mean automatic tax increases without limit using an index highly manipulated by the government (who benefits from the automatic tax increase). If fiscal discipline as it pertains to our current road taxes (gas taxes and vehicle sales taxes, too, which get dumped into general revenue and don't go to roads either) were restored, a fixed gas tax increase should be considered, not one pegged to inflation. But methinks if fiscal discipline were instituted, we wouldn't need to raise taxes to get our roads fixed since the vehicle sales tax represents $2-3 BILLION/yr, state gas tax diversions represent a billion a year, and billions more at the federal level.
Intellectual Dishonesty in Washington
Posted: Sunday, July 17th, 2011 at 10:20 am
By: Ken Bennight, San Antonio Tea Party
The United States is running up debt to previously unimaginable levels, and that debt is rapidly becoming impossible to repay. A technique countries have historically used to deal with excessive debt is to inflate the currency, thus making the debt cheaper to repay. Of course that works only so long as your creditors let you denominate your debt in a currency you control. How long before our external debt will have to be denominated in Chinese Renminbis, Saudi Riyals, or some other currency?
But the United States faces a more immediate problem in using inflation to mitigate the debt. Many U.S. obligations are indexed so that the obligations increase as inflation increases. Fortunately for Washington and unfortunately for America, that is a minor inconvenience. Just as the U.S. government controls inflation, it also controls the measure of inflation, the consumer price index. Washington can reduce increases in inflation-indexed obligations by manipulating how the consumer price index is calculated.
That’s already been done to some extent. If we still measured inflation as we did in 1980, the present inflation rate reported by the Bureau of Labor Statistics would be much higher than it is. According to a recent report by Dow Jones Newswire, Congress is considering again manipulating the calculation of the consumer price index to further reduce the reported inflation rate. Reducing the reported inflation rate, of course, has no effect on the actual inflation rate.
In pushing this proposal, Congressman piously speak of getting a more accurate picture of inflation’s true effect. But given that reducing the reported rate makes Congressmen’s lives easier, it’s hard to believe there’s no self interest involved. Are any of us, Captain Renault-like, shocked!, shocked! to discover that even the computation of the consumer price index is corrupted by politics?