Gasoline taxes can be employed to correct externalities associated with automobile use in order to reduce dependency on foreign oil and raise government revenue. This paper examines how gasoline taxes affect consumer behavior as distinct from tax-exclusive gasoline prices. It suggests that traditional analysis could significantly underestimate policy impacts of tax changes and discusses the implications of these findings.
Federal, state and local governments use a variety of incentives to induce consumer adoption of hybrid-electric vehicles. The authors study the relative efficacy of state sales tax waivers, income tax credits and non-tax incentives and find that the type of tax incentive offered is as important as the value of the tax incentive.