The price of gasoline in Europe is about three times that in the United States, mainly because the European gas tax is higher than the U. S. gas tax. In light of the principles you've learned in this chapter, what is the case for and against increasing the gas tax in the United States to the European level?

Answer: There are many advantages and disadvantages of moving gas tax in the United States to European level like increase in revenue, research, maintenance etc on gas industry is boosted., inflation is checked. chances of smuggling is eliminated

Disadvantages

Financial hardship for the masses, exportation of gas by government and private sector may not be possible.

It will encourage European investors to come in to compete with local producers

Explanation:

Advantages

Taxation is a fiscal monetary control tool which is used by the reserve banks to control the supply of money to the public and regulate inflation.

2. increase in the tax regime of the US gas industry will generate revenue that will allow the state carry out his re sponsibility

3 turn around maintenance and steady research in the gas industry will lead to improvement in the industry and it requires more funds which increase in taxation will provide.

Imbalance price between the US and European countries can encourage smuggling if this gas into European countries by greedy businessmen, mafia, cartels and criminals because of the profits that is there to be made, a balance of price via taxation regulation will make this unattractive.

Disadvantages

This might bring untold hardship on the masses who are the end users of this gas in their household.

Imbalance pricing can create a stimulus for exportation of gas from the US to other European countries, increase taxation will make this unattractive.

There may be in flux of foreign investors who will now have the courage to compete with local producers of gas, with more money available, they will constitute a threat to the local content or industry.