On August 9, 1993, U.S. President Bill Clinton signed into law a 4.3 cents per gallon increase in the federal gasoline tax. This increase, which brought the new federal tax level to 15.4 cents per gallon, was chosen from a menu of alternate options for energy taxation, including a British Thermal Unit (BTU) based tax and a tax on sulfur emissions. The increase was met with considerable political resistance and only passed by a narrow margin-2 votes in the House of Representatives and a tie broken in the Senate by the Vice President-after a protracted ten month debate. Although it has been estimated that the increased gasoline tax will raise $25 billion per year in tax revenues (D'Amato 1993, p. S7730), its passage seems to have been motivated primarily by a desire to achieve environmental and public policy objectives. In this article I will explore the economic rationale behind use of the federal gasoline tax, examine whether additional gasoline taxes are needed in the United States, employ economic reasoning to consider some of the tax's possible effects, and consider ways in which stated policy objectives might be achieved more effectively.
© 1997 by the Board of Student Publications, University of Northern Iowa
Heaney, Michael T.
"Getting Rid of the Old Gas-Guzzler: The Federal Gasoline Tax as a Tool of Public Policy,"
Draftings In: Vol. 9
, Article 3.
Available at: https://scholarworks.uni.edu/draftings/vol9/iss3/3