Fuel Tax Indexing – Is It a Good Idea?
When legislators are considering whether to increase the fuel tax, it is often suggested that the tax be indexed – that is, that the fuel tax rate ought to be attached to some index of costs, such as the Consumer Price Index. Much the same result could be achieved by imposing a sales tax on fuel, causing the amount of tax to fluctuate with the price of fuel. Are these good ideas? Not necessarily. Click here to see a discussion of the issue.