President Carter's proposed gasoline tax was if it seems the tax will not accomplish much.
Carter's "standby" gasoline tax would raise the federal excise[WORDS ILLEGIBLE] a gallon a year each year consumption rises above federal targets. The targets would allow for a slight increase in consumption in 1978 and 1979; from 1980 through 1987, consumption would have to drop. In years the target is met, the tax would drop 5 cents a gallon. Under Carter's plan the maximum tax increase over the next decade would be 50 cents.
Given the proposed targets and likely U.S. consumption totals, administration planners think the tax would be 35 cents by 1985. According to documents obtained by the Washington Post, the planners think that, with that large a tax, gasoline consumption would drop to 6.6 million barrels a day in 1985 from the 7 million it would be otherwise.
An increase of one penny in gasoline taxes, Carter energy experts say, would increase federal revenues by roughly $1 billion a year.
Thus Carter is asking Congress to pass a tax that would add $35 billion a year in gasoline costs in 1985 to save very little.
The administration says the proceeds from the gasoline tax would be returned to the public through cuts in income taxes and posibbly other means. Even so, the cost and savings numbers will be crucial in determining the future of Carter's standby tax.
When asked about the gasoline tax yesterday, Sen. Russell B. Long (D-La.) said, "I don't believe in leading a crusade if the numbers and the votes aren't there." Long, according to a member of his staff, sees little support for the gasoline tax in the Senate. As chairman of the Senate Finance Committee Long will oversee all the energy taxation questions in the Senate.
Another key Senate chairman, Henry M. Jackson (D-Wash.) of the Senate Energy Committee, has repeatedly expressed reservations about the gasoline tax, pointing out that the 50 per cent increase in gasoline prices over the last three years has not cut consumption and saving; "A gas tax won't get you anywhere."
On the House side, Rep. Thomas L. Ashley (D-Ohio) who heads the new ad hoc committee on energy, says the gasoline tax is the most "highly controversial" part of the Carter package.
Rep. Al Ullman (D-Ore), chairman of the House Ways and Means Committee, said yesterday, "We will be looking at other ways to do the same thing." Ullman's effort to pass a 20-cent gasoline tax rise two years ago was crushed on the House floor.
Some administration officials say in private that the gasoline tax is "symbolic," even though Carter has publicly asserted otherwise.
Acknowledging that the savings would only be about 4 per cent of consumption by 1985, one senior administration official said, "There is a temptation to say it's a small number, but it really misses the point . . . this is a test of how deeply we have to bite the bullet."
Carter's top energy adviser, James R. Schlesinger, says that the gasoline tax will also spur an early retirement of many of the "gas guzzlers" produced by American auto makers during the late 1960s and early 1970s.
Fuel economy of new American cars actually dropped from 17 or 18 miles per gallon in 1965 to 13 miles per gallon in 1974.
A number of leading economists, including James Osten and Harvard professor Hendrick S. Houthakker, say the tax might save only about 300,000 barrels a day in gasoline by 1985.
Houthakker, in a phone interview, said that the gasoline saving from Carter's standby tax "is not a major impact - but still not negligible."
Osten, a senior economist for Data Resources Inc., a private consulting firm headed by Otto Eckstein, said he expects gasoline demand to peak in the early 1980s without the gasoline tax.
The major reasons for expecting a leveling of gasoline demand, Osten says, is the introduction of more fuel efficient diesel autos and the increases in auto efficiency required by the 1975 Energy Policy and Conservation Act.