Gasoline Tax

(1) Refer to Figure 17.15 of the attachment “Gasoline Tax” on the Session 7 page and answer the following questions:

(a) What effect would increasing the price of gasoline have in terms of giving consumers an incentive to choose more efficient vehicles (example: electric vehicles)? If you are purchasing a new car, how would the increased costs of gasoline motivate you to purchase a more efficient vehicle over other factors such as size of car, comfort and safety? Would a tax incentive from the government influence your decision to purchase the vehicle?

(b) Make a table of the pros and cons of raising the price of gasoline through taxation in relation to environmental, economic, and social issues. Write a paragraph that includes a discussion of your evaluation of the arguments and your position on the issue. Would you change your view point if the tax dollars collected were used directly to support research on alternative fuel vehicles/ electric vehicles or provide incentives to purchase energy efficient vehicles?