Tuesday, June 9, 2009

Cash for Clunkers

The Federal Government is about to deprive Massachusetts of gas-tax revenue. The cash-for-clunkers bill just passed by the House will reward anyone $3500 for trading in a car that gets less than 18 MPG for one that gets 22 MPG or more. There's an extra $1000 if the new car gets 10 MPG better than the old one.

That means that a driver currently paying the Commonwealth 23.5 cents every 18 or fewer miles, will pay at a minimum 20% less in gas tax, assuming fixed miles traveled. Combine that with the steep rise in mileage that is coming in new cars and the fact that the costs of maintaining roads goes up as gas prices go up but the revenue per gallon is fixed, and one comes to the following conclusions: the gas tax is too low, but more importantly it's a pretty stupid way to fund roadways (and transit).

It's time to tax based on vehicle miles traveled (VMT).

1 comment:

Ju said...

while this was suppose to be for consumers, it is not. scams abound, buyers beware. check this : http://butasforme.com/2009/07/17/cash-for-clunkers-the-ultimate-bait-and-switch-marketing-tool/