Negative Effects of Increasing Gasoline Prices

An economic system is a structure composed with people and institutions. Both dimensions are responsible for maximizing the wealth of an economy, regardless of being on a domestic or international scale. These people and institutions play a large role, whether at the top or bottom of the societal ladder. At the top of the ladder, people and institutions are responsible for managing money and taxes received from people and institutions at the bottom of the ladder. This money and taxes can come from a wide assortment of sectors including agriculture, healthcare, workforce, and transportation. The transportation sector involves the taxation of gasoline. Gasoline balances on a positive and negative line. On one hand, it provides transportation for the majority of citizens and companies in North America. However, Menkes and Fawcett explain, “octane enhancing constituents of gasoline pose a number of health hazards including metallic (lead, manganese), aromatic (e.g., benzene), and oxygenated additives in both industrialized and developing countries”(1997,270). When approaching the matter of weather or not to double taxes, the easy answer is yes. The government doubles taxes and gasoline users are discouraged to fuel their pollutant producing vehicles. However, the repercussions of this tax extend far and beyond such an appearance of an easy remedy. There are a number of factors to consider when looking at this situation more closely. Doubling gas taxes will affect the stable base of rural communities. With an increase of gasoline prices, production prices will increase. The cost of goods increases as a result of transportation cost increasing. The effects will slowly increase up the ladder through consumer and in turn the greater economic sector internally as well as externally. This essay will demonstrate why doubling taxes on gasoline produce a negative chain reaction both in the Canadian domestic economy as well as the Canadian international economy.

References: Barron,John. Blanchard, Kelly and Umbeck,John.2004. “The Journal of Economic Education”. An Economic Analysis of a Change in an Excise Tax, vol. 35,no. 2 (Spring 2004) 184-196. Journal on-line. Available from http://www.jstor.org   Menkes, David and Fawcett, Paul.“Environmental Health Perspectives” Too Easily Lead? Health Effects of Gasoline Additives, Vol. 105 no.3 (March 1997).270 of 270-273.Journal on-line. Available from http://www.jstor.org.