Is Gas Tax the New Sin Tax

comparison of state gas taxes and budget deficits for 2012

State gas tax vs budget deficits*

Business news is already talking $2 a gallon (and less)  for regular gas in the foreseeable  future.   Although consumers are feeling more cheery this holiday season with that added cash in their pockets, some State governments may not be so happy.

For every gallon of gas, the US federal government gets 18.4 cents per gallon, add to that state and local taxes, and on average  you pay 49.5 cents a gallon or about $25 for a 50 gallon fill-up1.  With lower gas prices you will be more willing to fill your tank and by extension, increase  your state and federal governments’ tax revenues (Win-Win, Hooray).

For those five states (shown in the green) who have no deficits, or others like Indiana who have a high gas tax but low budget deficits, maybe you should consider joining in the holiday spirit and give some money back to your constituents.  Lower gas taxes would increase the money multiplier and boost your local economies (Sing Jobs, jobs jobs, Cheers all around).

Poor California who has  a fiscal deficit running nearly 30% and one of the highest gas taxes in the country, your will be unable  or unwilling to lower your tax. In all likely-hood you will need increase  your gas tax. (Bah Humbug).

holidays Happy Holidays from the Garden Friend

1 numbers from April 2013)

*Based on data gathered from these websites and sources:

American Petroleum Institute

Center on Budget and Policy Priorities, Nelson A. Rockefeller Institute of Government, SUNY

Cracks in Global Quantitative Easing: Japan

Cracks in Japan's financial systems

Japan’s fiscal policy shows signs of stress

Moody’s Investors Service downgraded Japan’s credit rating  today  from A1 to Aa3  with a stable outlook over a heightened uncertainty of whether Japan could:

1. Achieve its fiscal deficit reduction goals.

2. An uncertainty over the timing and effectiveness of growth enhancing policy measures in a deflationary environment.

3 The increased risk of rising Japanese government bond B yields and reduced debt affordability  in the medium term.

Moody’s downgrade comes after Prime Minister Shinzo Abe decided last month to delay  the 10% national sales tax that was scheduled to take effect in 2015. The reason for the delay was the calling of a snap election to ensure popular support for his economic policy.

Financial Impact and Effects

The Bank of Japan buys trillions of yen worth of Japanese bank bonds each month as part of their recent quantitative easing program. Moody’s rating downgrade will make it more difficult for the Bank of Japan to expand this bond buying program in the future and if the Aa3 rating is extended too long, it could have a negative effect on the Japanese economy and investment.