Government is actually the worst failure of civilized man. There has never been a really good one, and even those that are most tolerable are arbitrary, cruel, grasping and unintelligent. Indeed, it would not be far wrong to describe the best as the common enemy of all decent citizens.-H.L. Mencken: Minority Report: H.L. Mencken's Notebooks.

 

The energy crisis has put new emphasis on what is now termed a "gas guzzler." A new threat is appearing in the Washington hallways that could cost fleet buyers millions of dollars.

In 1975 Congress rejected a proposal that would have applied excises and rebates across the board for all cars sold domestically; and since most imports are highly fuel-efficient, it would have favored import sales and prompted U.S. makers to import more cars.

Now, the Carter administration is seriously considering a method of creating a long-range tax on "gas guzzlers" and rebates to fuel-efficient car buyers without incurring the wrath of the labor unions.

The current proposal calls for balancing the rebates of one year against the penalties of the previous year on a country by country basis. The trick is to avoid favoring the imports without violating the General Agreement on Tariff and Trade by applying the proposal only to domestics.

It is a terrifying idea and one that could be devastating to both fleets and the industry as a whole. Automakers are already saddled with economy standards that progressively work up to an average of 27.5 mpg by 1985. That, in itself, is going to accomplish the obvious goal through a free choice market. We strongly support Thomas A. Murphy, GM's board chairman, who recently called the plan "one of the most simplistic, irresponsible and shortsighted ideas ever conceived."

Mr. Murphy cited several problems with the excise tax-rebate proposal:

 

  1. No one knows how much it could influence the small car-big car mix. Because the wide range in car prices already favors small cars, it remains questionable how high the taxes and rebates would have to be to discourage people from buying large cars and induce them to buy small cars.
  2. One predictable result is that people who now drive big cars will decide to keep them. To the extent that people decide to 'get another year out of the old car,' the improvement in fuel economy of all cars on the road will be retarded.
  3. If enough people don't like the new models - or their cost, including an excise tax - the impact on sales and employment in the automobile and related industries would be serious.
  4. When owners of late-model cars decide to keep them rather than trade for new ones, it deprives other potential purchasers of the ability to purchase good used cars. This eventually works to deny automobile transportation to low-income persons who can only afford a used car at a low price.
  5. A slowdown in the turnover of old cars for new ones is not only counter productive to reducing total gasoline consumption, but also to improving air quality, because it delays replacement of higher-polluting older cars with more emission-free new ones.
  6. Although sales of American-made small cars might be helped, the tax-rebate scheme would also enhance the attractiveness of foreign-built cars, which tend to be smaller and therefore deliver more miles to the gallon.
  7. Because changes in new-car prices influence used-car prices, a tax on new large cars will increase the prices of used large cars, and rebates on new small cars would tend to depress prices of used small cars. Therefore, the impacts of taxes and rebates would be diluted.
  8. Immediate losers would be the present owners of small cars. Their interest in fuel economy and contribution to energy conservation will have the ironic reward of an overnight cut in the value of their cars
  9. Families with five or more people - and that's 23-percent of all American families - won't fit into a four-passenger car. To discriminate against these families by a penalty tax on large cars is wrong.

All good intentions notwithstanding, the energy situation can not be resolved by a government edict.

Mr. Murphy, we agree with you wholeheartedly!

 

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