People argue that a higher tax on gasoline is not necessarily an increase in gasoline taxes....

People argue that a higher tax on gasoline is not necessarily an increase in gasoline taxes. Explain if you agree or disagree with this statement.

I need a thorough (at least) two or three paragraphs answer.

Expert Solution

A higher tax on gasoline is not necessarily an increase in gasoline taxes.I agree with this statement and i will try to explain why in the following manner:

Increasing taxes on gasoline will create a huge amount of revenue which can be spend on financing welfare programmes, mainly for the poor which can bridge the gap between poor and the rich. Most of the poor don't even use a car so he doesn't really need to spend on gas and so they are not faced with the burden of tax.The government can instead spend the revenue on activities like education of poor,various welfare plans for the retired,disabled people and for the poor who don't earn enough which will decrease the cost of living for the society as a whole as the present generation will reap the benefits after some years while also creating equitable distribution of resources.

The high tax will allow the government to curb pollution as people will spend less on gas and prefer to use the resource in an optimal manner and as we see today that we are facing problems like global warming, ozone hole and various other environmental problems, we may get some relief as pollution will decline and the future generations will reap the benefits.

The government can use the improved revenue on improving the infrastructure of the country, maintain the roads, improve the transport system and finance the various investments which will yield positive benefits over the years thereby distributing the economic benefits to the whole society which will in turn raise the standard of living, increase the wages and income, generate employment opportunities, increase the efficiency, reduce the costs and bring in more revenue worth billions of dollars per year.

Besides, it is optimal to tax gasoline higher as energy products have very small elasticity of demand. The government is only sending the signal to the economy that we are consuming fuel at a high rate and we need to curb it rather than increasing it.

Rahul Sunny answered 2 years ago

Who Pays Higher Gasoline Taxes? Gasoline taxes are paid by sellers from the revenues they earn...

Who Pays Higher Gasoline Taxes? Gasoline taxes are paid by sellers from the revenues they earn from their total sales. Thus to receive the same effective price for selling a given quantity of gasoline, a gasoline producer must charge an actual price that is higher by exactly the amount of the tax. Sellers supply a given quantity of gasoline, but at a price that is higher by the amount of the tax that they have to pay to the government....

5. In the rest of the world, the tax on gasoline is considerably higher than in...

5. In the rest of the world, the tax on gasoline is considerably higher than in the United States, and gas consumption is considerably lower. Why doesn't the United States increase the gas tax?

Opponents of increasing the tax on gasoline argue that the big oil companies just pass the...

Opponents of increasing the tax on gasoline argue that the big oil companies just pass the tax along to the consumers. In the long run, demand for gas is more _________(Elastic/Inelastic) than in the short run. This means that oil companies pass _________ (More/Less) of the tax on to the consumers in the long run than they do in the short run.

Economists assert that an increase in gasoline tax can be used to move gasoline consumption towards...

Economists assert that an increase in gasoline tax can be used to move gasoline consumption towards both efficiency and sustainability. With the aid of a diagram explain how the use of a gasoline tax can bring about this result.

An increase in the tax rate will always increase the amount of taxes collected. (true or...

An increase in the tax rate will always increase the amount of taxes collected. (true or false)

How is it that a higher tax rate can increase tax revenue in some cases but...

How is it that a higher tax rate can increase tax revenue in some cases but decrease it in other cases? Relate this to the price elasticity of demand.

Gasoline prices are typically higher during summer, when a lot of people are on road trip....

Gasoline prices are typically higher during summer, when a lot of people are on road trip. Sam, who did not have any course in economic, says “gas companies just find any excuse to increase the price”. How does Sam’s perspective differ from that of economists who use the model of demand and supply?

) Suppose you want to test the hypothesis that higher income taxes make people work fewer...

) Suppose you want to test the hypothesis that higher income taxes make people work fewer hours per year on average. The tax rate is your independent variable and hours worked per year is your dependent variable and you want to use each individual country as an observation. Suppose you run your regression and find that people in countries with higher income taxes work more hours per year. What is a potential reason why that could happen? what is the...

In America, Suppose you want to test the hypothesis that higher income taxes make people work...

In America, Suppose you want to test the hypothesis that higher income taxes make people work fewer hours per year on average. The tax rate is your independent variable and hours worked per year is your dependent variable and you want to use each individual country as an observation. Suppose you run your regression and find that people in countries with higher income taxes work more hours per year. What is a potential reason why that could happen? what is...

Is an increase in the unemployment rate necessarily a bad thing? Is a decrease in the...

Is an increase in the unemployment rate necessarily a bad thing? Is a decrease in the unemployment rate necessarily a good thing?

Question