Today's Opinions, Tomorrow's Reality
A Severe and Enviable Wrath
By David G. Young
WASHINGTON, DC, September 19, 2000 --
With massive and spreading fuel protests entering their third week in Europe, it's easy to dismiss activists as a bunch of noisy whiners. In France, where the unrest began, transportation and business are so regularly disrupted by civil unrest that protests seem to be the national pastime. My last visit to Paris was fouled by not one, but two unrelated protests of people seeking more resources from the paternalistic government. At first glance, demands for lower prices seem quite unreasonable -- everyone the world over has to deal with higher fuel prices caused by demand rising faster than supply.
Look deeper, though, and it becomes clear that these aren't the usual protests. In France, the strikers blocked roads to prevent the delivery of fuel for almost a week, causing stations to run out of gasoline, and the country to grind nearly to a halt.1 The tactics were soon copied by less strike-happy British truckers and farmers, who last week unleashed their equally severe wrath upon motorists and consumers throughout the island.2 This was followed on Sunday by similar actions across the continent, most notably in Spain, where a coalition of taxi drivers, fishermen, and farmers have blockaded refineries, demanding that the government lower fuel taxes.3
Taxes. Let there be no mistake, this is what the protests are all about. The vast majority of the cost Europeans pay for their gasoline doesn't go to oil companies -- it goes to the government. In Britain, where both prices and taxes are the highest in the region, 73 percent of the $4.33 per gallon retail price of diesel fuel is government tax.4,5 Protesters are well aware of these high taxes, as well as their proportional nature. The higher oil prices go, the more money European governments make from taxes. That governments profit from people's misfortune naturally enrages European consumers, as does their leaders' patronizing attitudes. British Prime Minister Tony Blair, for example, defiantly and forcefully refused to give in to public pressure to lower fuel taxes.6
But Blair may have to. Protesters, who temporarily suspended strikes after several days of crippling action, have promised to resume their tactics if the government refuses offer give tax relief. France has already given in, offering tax breaks to special interests that may cost the government $900 million in future revenues.7
Similar disruptions have not hit the United States because the government does not tax fuel nearly as much. The American government instead funds itself through an income tax, which is far more insidious. When times are good, and people's salaries are rising, the government is flooded with new revenues. This is the exact situation today, where a record and growing $106 billion annual federal surplus has been created by people with higher incomes paying ever more taxes to the government.8
Such a system is much more dangerous than the one in Europe, because it leads to a surge in government revenue when times are good, and government programs are clearly needed least. Further, it does little to foster anti-tax sentiment, because people are less likely to demand tax rebates when their incomes are higher than ever before. Witness the success of President Clinton's anti-tax cut slogan, "Don't squander the surplus."
The very real danger is that America's lack of anti-tax sentiment will cause it to be saddled with a new generation of unneeded government programs. The presidential election campaign makes things worse. With the surplus skyrocketing, George Bush and Al Gore have engaged in a government program proposal bloatfest. Between them, they have quite nearly promised everything to everybody. The National Taxpayer's Union estimated in August that Gore's new spending proposals will cost $233 billion per year, while Bush's would cost $43 billion.9 This estimate was before Bush's recent proposal to give away prescription drugs for an additional $11 billion per year.10
Given this bleak outlook, Europe's system of taxing fuel seems infinitely preferable. It provides a built-in mechanism to cause taxpayer outrage whenever the government starts getting a bit too fat off of its revenue. America's system, in contrast, makes taxpayers ever more complacent.
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