It is strange, then, that the most recent Big Mac Index has the Euro-area as only 1.3 times as expensive as the US. http://www.economist.com/node/17257797?story_id=17257797
Also, do those prices include sales tax? I know it’s only a few percent, but still.
They were passed in Denmark mainly in the 70s, but not at all without problems. One government in 1973 was almost annihilated on account of gas taxes. But the next government always kept the tax at its new high level, because it was too difficult to raise money elsewhere and more difficult still to cut back on spending. Today there is a curious law which states that the tax on gas in Denmark has to be lower than in Germany. Since otherwise people just go across the border and buy their gas. Supposedly the same would be the result in parts of the USA.
I used one of the innumerable inflation calculators to be found on the Internet to determine what the equivalent to $4.00 a gallon would be back in 1950. It came out to $0.43. IIRC the cost of gas back then was around 25 to 30 cents a gallon, so the present day comparable price is about 50% more than in 1950. Not insignificant, but not the end of the world either.
Thanks. Suspected as much but didn’t have the numbers handy.
I was talking diesel price, not gasoline. And I would hazard a guess that a Big Mac meal is not less in say New York or California than it is in Minnesota. Just happens I am more familiar with Minnesota.
I really didn’t want to use the Big Mac meal as an example, but other recent comparable purchases, oscillating fan, golf shirt, and bread have too many variables.
I have no idea, but assume the Big Mac Index does a lot of averaging, so I would not be surprised that specific numbers are different.
No idea whether the Minnesota Big Mac price included tax. Haven’t bought one in Minnesota in over 9 months. All other prices I listed included all applicable taxes.
The poor spend a relatively large proportion of their income directly or indirectly on fuel. This is something that is more or less a fixture of the economy.
In many third world countries like China and India, fuel costs are controlled (i.e. subsidized) by the government as an explicit subsidy to the poor (China is moving away from this somewhat in recent years but the practice is still prevalent in India and other poorer countries). Obviously this form of subsidy has the disadvantage of encouraging more fuel use, and a more efficient way to subsidize the poor would be to raise the price of fuel and give the poor cash subsidies. However it is recognized that in countries like China and India, the government is simply too hopelessly corrupt and ineffective to implement such a policy - any kind of welfare would be quickly swallowed up by fraud and government graft. So as a practical matter, it is better to go the inefficient but still effective route of directly subsidizing fuel prices.
A similar case could be made for the US. It would be more efficient to raise taxes on fuel and offset that with an increase in welfare for the poor, so that the poor are not driven out into the cold and yet still have economic incentives to cut back on fuel usage, but since even poor people in American largely oppose both taxes and welfare, it’s simply not politically possible, and so you make the best of a bad situation and keep stumbling on.
Or “welfare for the working.”
Make the first $X of income exempt from social security (though still counting toward one’s S.S. account) where X is whatever it needs to be to offset the new gas tax. Note that this would be highly stimulative since it effectively increases wages while reducing wage cost.
I proposed this decades ago; a few pundits and Congressmen have now adopted my idea. 
Just to echo this, there a few studies asserting a correlation between foreclosures and high gas prices as well (1, 2, 3, 4).
“Here”, you mean the US?
The US, for the past 200 years, has been at the mercy of the political influence of conservative ideology, which has, at its basis, the abuse and exploitation of any resources it can abuse and exploit, from natural resources to human capital.
Energy taxes to try and affect US consumption patterns is a legitimate proposition, but it has been killed and shot down by all conservative and Republican political forces in the past 100 years.
A “massive gas tax” is necessary to undo the global damage we are doing as a result of US and Saudi Arabian agreements that were done in the 40’s and 50’s, to supply the US with oil and the US to protect Middle Eastern interests.
Not many people are aware of this situation, so they keep on wasting gas and hoping the price at the pump will be low so they can keep on doing what they are tought to do.
Not to say that the working poor don’t exist in European countries with high fuel taxes, or that they don’t drive, but one component may be that there are less of them, and a lower proportion of them drive.
Certainly, when you consider a scale of material needs ranging from the absolutely indispensible (e.g. oxygen) to things that everyone including their owners agree are luxuries that one could easily do without (e.g. a $500m yacht), cars seem to be further towards the ‘indispensible’ end of the scale in the US than in the European countries I know. For example when I read of some poor people/families temporarily living in their car in the US, I asked myself ‘why don’t they have that absolute necessity, an apartment, but do have that relative luxury, a car?’.
Also Americans seem to be OK with a tax structure that taxes property (i.e. mostly homes and apartments) highly and fuel lightly, which seems to support this impression on perceptions of priority. For example the town where I live has one of the highest property tax rates in the state, which is a political hot issue, the subjet of much debate at budget time, and a source of much bitching by homeowners. It’s not very feasible politically to raise it further. Revenue amounts to €15m/yr for a city of pop. 85k, i.e. $22 per head of population per month.
Until fairly recently, I had never owned a car that cost me more than my monthly rent at the time. And used cars don’t require for first and last month’s rent or security deposits. I don’t know what the situation is in European countries, but you really don’t need to be doing particularly well to afford a really cheap used car.
You all are ignoring the fact that our respective histories have a lot to do with the differences from country to country. Are you people seriously trying to compare the UK with the U.S.? Their history couldn’t be more different. The U.S. was the dominant oil producer from probably 1870 through to the 1950s. Even now, we produce the third most oil in the world. Contrast that with the UK, which may have controlled a decent amount of production in the first half of the twentieth century, but most of it was in the Middle East. They didn’t really develop any notable production of their own until the 1970s. That sort of difference shapes energy policies and public perceptions.
Is Venezuela foolish for not only not having high gasoline taxes but going the opposite route and subsidizing fuel costs? No, because they are a net exporter and if they don’t subsidize fuel costs the people would revolt.
China pays less per gallon than the U.S., are highly reliant on foreign oil, and experiencing rapid consumption growth. Basically, they have the same oil problem as us with the big exception that theirs is getting significantly worse every year while we sort of stay the same. Obviously they have a big incentive to curb consumption growth since not only are they a huge net importer, not only do they subsidize fuel costs, but they are also the primary driver of consumption growth worldwide meaning they can almost single handedly cause rising prices if they leave their policies unchecked. Yet, they are only reluctantly allowing prices to rise along with crude prices since they might face some real revolutionary fears if they let prices rise too much. That’s something they need to worry about when the average household spends ~40% of their income on food versus us in the U.S. at <10%.
here a car is pretty much a necessity if you live and work in the countryside.
I believe that average Americans need to consume less energy in general. That said, i do not believe that higher fuel taxes are not the answer to curve consumption. American cities outside the north east were built around the automobile and public transportation in lower population density areas makes little economic sense. Distances in the USA are extremely vast as compared to europe where cities were built long before the age of the automobile. The reason why gas taxes are so high in europe is to support the road networks and public transport. Europeans also use smaller cars because it is just easier to navigate the small tight city and country roads. What most europeans don’t understand is that people in many areas out west just need a car and especially an SUV to be able to deal with the roads, distances and terrain. If taxes were raised it would only hurt the People. What obama has done is raise the CAFE standards and this has led to all these new 40 MPG (non hybrid) cars out there because the average fuel economy of the entire company’s car line-up needs to reach something like 60 mpg by 2030. I believe that this is the answer because it is forcing the car companies to finally provide cheaper fuel efficient cars, even SUVs are getting 30 MPG now. :)
What a higher tax on fuel would do is drive prices of everything up! :eek::eek: This means that the price of our food and goods in general would rise with the higher fuel prices because things are produced in centralized areas (produce from california, meat from the midwest etc. This is something i hate but it is the truth of our economy. Most of these products are shipped by truck and rail which run predominantly on Diesel fuel. What the govt needs to to is increase fuel economy standards and set goals for industry to obtain. This is true with the new TIER laws for diesel locomotives which are now meeting more stringent fuel economy laws. SO my answer is to increase efficiency standards, not fuel taxes. Europe has high taxes but then again most families do not NEED more than 1 car per house hold and the distances they need to travel to work and school or seldomly farther than 20 miles on a daily basis. So what works in Europe doesn’t always translate to the rest of the world. We are a big country and we need a way to get around cheaply. that’s just the way our country was built and it isn’t going to change any time soon!
I doubt any of them ever made raising taxes on gas a major point of their platform.
Yes, those taxes are unpopular. But they’ve been around for as long as I can remember, and I’m 47. So, my best guess is that they’ve been implemented during the 60s/70s. But frankly I don’t know. Before the first oil crisis in 1974, gas was absurdely cheap. So before that, maybe it was easy to tax gas unnoticed when a couple billions were missing in the yearly budget.
This kind of taxes on cheap and commonly sold product put into existence ro round up a budget are sometimes called “pocket taxes” (as in “pocket money”). This system was used for cigarettes, for instance, until taxing tobacco products became ostensibely a public health policy.
Another possibility is that since essentially all oil was imported (contrarily to the USA, historically), it was considered good policy to tax gas in order to limit imports at a times when globalization wasn’t exactly a trendy concept. This also would put those taxes back to the 70s at the latest.
Now that gas isn’t cheap at all, having a 150% tax (made up figure) on it can hardly go unnoticed. But in our times of huge public debt and concerns about climate warming, supressing these taxes isn’t going to happen, regardless how popular a move it would be.