Desperate for new revenues to offset the monstrous deficit, U.S. officials - from Senate Republican leader Robert Dole to Democratic House Speaker Thomas Foley - are gingerly endorsing a controversial increase in gasoline taxes.
Their European counterparts say it is about time - and not to worry.On the east of the Atlantic, a gallon of gas can cost nearly $5, with taxes amounting to three-quarters of the bill. Although almost no one behind a wheel is delighted with such a price, few drivers seem ready to revolt against their governments - or abandon their cars - despite pump prices that have been four times the American norm for a generation.
What lies behind public acceptance of the higher gasoline taxes, say experts, is widespread recognition of the tax bite's dividends:
- Its revenues are used to pay for popular government spending programs, many of which would be vulnerable to budget cuts without the tax windfall from service stations.
- Although high fuel taxes have not kept Europeans off the road, they have nudged people to support mass-transit systems and to buy more fuel-efficient automobiles, benefiting the environment and trade balance alike.
"Frankly, we've never understood the American position on gasoline taxes," said an official at the Paris-based Organization for Economic Cooperation and Development, which monitors policy trends in 24 developed nations.
"From our perspective, U.S. motorists have no financial incentive not to drive wastefully. And your government is overlooking a revenue source that virtually everyone else takes for granted."
The potential income from these revenues is immense. Each 1 cent increase in U.S. gasoline taxes would yield an estimated $1 billion in new revenues.
Current U.S. federal gasoline taxes are 14 cents per gallon, just under 1/20th the European average. With state and local taxes, about 33 percent of the average price the American consumer pays at the pump goes to the government.
If Washington taxed gas at European levels - ranging from a low of $1.70 per gallon in Turkey to Italy's league-leading $3.65 - President Clinton might be able to deliver on his campaign promise to cut the deficit in half in four years.
But so far, the U.S. proposals have been much more modest than that, arguing for a 50-cent increase at the pump.
The highest pump prices in the OECD are in Italy, where consumers pay $4.85 per gallon of high-octane premium, three-fourths of it taxes. Yet, Italian officials say the hefty price tag has had surprisingly little effect on the number of miles driven in their country.
"People are used to it by now," said Umberto Rastelli, an economist in the commercial sector of the Italian Foreign Ministry. "When the tax goes up again, we can measure a little reduction in traffic for a couple of weeks - but after that, it's back to normal."