Question

Do you think that an additional tax on gasoline to meet the health costs of driving cars would be a regressive, progressive, or a proportionate tax? Based on the kind of tax it is, would it be a fair tax? Would such a tax hurt the auto industry and thereby the economy?

Answer 1

Additional tax on gasoline is proportional tax because it is flat tax levied across all income groups and is not discriminatory.

It is relatively fair tax because this encourages people to use biofuels and renewable source of energy and discourages excessive use of gasoline because it has potential to pollute.

The tax shall have almost negligible impact as people will switch to alternative and biofuels or electric cars. This will have near term losses however due to decrease in gasoline however in long term it will stabilise as auto industry will cope with change and produce fuel efficient cars thus economy will benefit in long run and thereby also save on health expenses.