a history of rising gas prices 2008 PLR Article

Gas taxes and gas prices | Are gas taxes making our gas cost too much? With the constant rise in gas prices, it’s easy to question where that money is going. Is it going to the oil company? The gas station? Or the government? The truth is, it’s a combination of all of the above. Gas taxes, however, do take a large chunk of it. In the United States, 26 percent of the price of gasoline comes from federal and state taxes, which is small compared to the nearly 40 percent of their price in Canada, and Europe’s tax accounting for largely 70 percent of their gas price. The high percentage of federal tax in Canada and Europe causes their total price to be much higher than that of United State’s gasoline. Taxes on gasoline are imposed for numerous reasons. One of the obvious reasons there are taxes on gasoline is to raise some revenue for the government. The government primarily spends the money collected on gasoline for the building and maintenance of public roads. Governments are able to pay for these superficially free roads by charging a tax on gasoline. Taxes collection is based on the quantity purchased, so the more gasoline purchased by an individual is directly related to how much that person uses public roads and highways. This is one way the government can charge for the use of these roads. Some other reasons for setting gasoline taxes high are pollution control. High taxes on gasoline discourage automobile use, and encourage people to rely on public transportation. Pollution is a big concern in many countries, and taxes are one of government’s tools to decrease its amounts. On the other hand many large oil producing countries have very small gasoline prices compared to the U.S. This is also partly because of taxes on gasoline. In Saudi Arabia, for example, there are no local, regional, or sales taxes. This drastically reduces the price of gasoline in their country, since many gas taxes average 40 percent of the price. Another reason for differing gas prices comes from the cost of transportation. It is much more expensive to ship gasoline out of the country, and especially over seas. Oil producing countries a minimal incur a minimal cost from transportation within their country. Gas taxes are just one facet f rising gas prices, but they are a factor that consumers can combat on a political level. If you feel that the tax rates are unfair, make it a point to compose letters to your local government officials and ask them to look for alternatives to rising gas taxes. Pay attention to the votes your representatives make in Congress. Let them know that you think there is a better way to get the money they need to fund their projects. And, of course, your vote always counts.