a population ignorant of economics and suspicious of the Administration's motives probably cannot be brought to understand the social benefits of high gasoline prices and heavy gasoline taxes.
Perhaps, but when you live in a country where you pay more tax on a single tank of fuel [1] than it'd cost to offset your carbon emmissions in a year [2], the population has every right to be suspicious of the Administration. Tim Worstall:
As this paper (.pdf) argues, the correct Pigouvian tax on petrol in the UK is roughly 50% of the one already charged.
Sorry Greg, but a Pigou Tax set higher than the harm caused by the externality validates ignorance and suspicion, and in the UK it's a tax grab, plain and simple.
[1] 45.09 litres to fill up a Toyota Corolla and 55.45p per litre is tax (source.pdf); = £25.00 tax for a full tank of petrol. Alternatively, try Petrol Tax Calculator.
[2] According to Terra Pass my Toyota Corrolla emits approax 6,515lbs of CO2 a year, which they'd charge $39.95 a year to offset; = £20.98 (1 USD = 0.525138 GBP, true at 2006.11.07 12:56:15)
One small note. I found that paper at, err, Greg Mankiw's blog.
Posted by: Tim Worstall | December 10, 2006 at 09:17 AM
You are right!!
Sometimes is difficult bet some taxes are just to high!!
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