Saturday, November 26, 2005

Perverse incentives

While the auto industry is willing to move toward hybrid vehicles, a study commissioned by the U.S Chamber of Commerce has proposed trying to reverse any movement in that direction:
Less than four months after President Bush signed a six-year, $286.4 billion highway and public transit act, a report commissioned by the US Chamber of Commerce said that the federal Highway Trust Fund is running out of money and that Congress needs to think about new revenue sources...

Proposals for the longer term could be more controversial. One is that owners of hybrids and other alternative fuel vehicles pay a vehicle fee, the argument being that drivers should bear their fair share to fill potholes and fix bridges, regardless of how much or what kind of fuel they use.
Note that the proposal is being made in response to Bush's threat to veto any bill which would raise fuel taxes - even though the fuel tax (unlike all other major U.S. taxes) isn't indexed to inflation, and hasn't been raised since 1993. Which means that the fuel tax already favours less efficient vehicles than it would if the most basic of adjustments had been made.

And given how few hybrid vehicles are on the road so far, there isn't any reasonable argument to be made that hybrids are themselves responsible for any decline in fuel tax receipts.

But apparently a deck already stacked in favour of gas guzzlers isn't enough for the drafters of the proposal. Their suggestion would place an added cost up front to dissuade buyers looking at more efficient vehicles...and that in turn could put a large dent in any effort by the auto industry to offer more efficient vehicles for sale.

It's bad enough that the U.S. is one of the key countries trying to undermine any global agreement on climate change. But it would be all the more ridiculous for the U.S to actively place barriers in the way of cleaner technology. Hopefully the study won't lead to any policy results...but it's still worth pointing out that such damaging suggestions are actually receiving serious attention.

(Edit: typo.)

(via Suburban Guerrilla.)

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