Gregory Mankiw (Professor of Economics at Harvard)

‘Cutting income taxes while increasing gasoline taxes would lead to more rapid economic growth, less traffic congestion, safer roads, and reduced risk of global warming — all without jeopardizing long-term fiscal solvency. This may be the closest thing to a free lunch that economics has to offer.’

From: Mankiw, Gregory (May 24, 1999) Get Tax Now!, Fortune.


'A good rule of thumb is that when you tax something, you get less of it. That means that taxes on hard work, saving and entrepreneurial risk-taking impede these fundamental drivers of economic growth. The alternative is to tax those things we would like to get less of.
 
Consider the tax on gasoline. Driving your car is associated with various adverse side effects, which economists call externalities. These include traffic congestion, accidents, local pollution and global climate change. If the tax on gasoline were higher, people would alter their behavior to drive less. They would be more likely to take public transportation, use car pools or live closer to work. The incentives they face when deciding how much to drive would more closely match the true social costs and benefits.
 
Economists who have added up all the externalities associated with driving conclude that a tax exceeding $2 a gallon makes sense. That would provide substantial revenue that could be used to reduce other taxes. By taxing bad things more, we could tax good things less.'

Mankiw, Gregory (January 21, 2012) A Better Tax System (Assembly Instructions Included). The New York Times.