[ajss]

Whatever the intentions of the people imposing the tax, the effect is to disincentivize gas consumption. My point is, if the government taxes certain activities by $x and subsidises the same activity by $y, quoting only $y doesn't give the full story.

[Dylan16807]

As far as I know gas tax isn't paid by the producers, but sure we can combine gas producers and users for this discussion. Money taken or given to either one has the same effect on the demand for gas production.

When that $x in taxes is paying for the infrastructure used, then the gas producers/users are actually getting $y+x from the government. The $x, being a service charge, cancels out, and the only thing left is $y. $y is the difference between the world we live in vs. a world where the government paid no special attention to the industry. It's the most important number.

[ajss]

Even granting your argument, if the government takes $x as a service charge for infrastructure, and subsidises by $y, that would be a net subsidy of $y, not $y+$x.

But $x is not a service charge. It bares no relation to the amount of anything used. They can't opt out of the road part of the service charge and build their own roads. The tax is not hypothecated. Whatever the rhetoric of politicians, it doesn't bare any resemblance to a service charge.

[Dylan16807]

> that would be a net subsidy of $y, not $y+$x.

That's exactly what I was arguing, yes. That $y is important and $x is irrelevant.

> They can't opt out of the road part of the service charge and build their own roads.

That has no real bearing on the economics of the situation. Paying $x to the government for roads and paying $x to a private contractor for roads work the same way. That's why the net subsidy is $y.

If there is a tax that's applied specifically to gas companies that isn't directly paying for infrastructure they use, then that tax can be subtracted from the subsidies. But the gas tax doesn't fit that bill; if anything it undercharges.

[ajss]

> If there is a tax that's applied specifically to gas companies that isn't directly paying for infrastructure they use, then that tax can be subtracted from the subsidies. But the gas tax doesn't fit that bill; if anything it undercharges.

The gas tax is only one of many taxes that these companies pay - you have to sum all their subsidies and subtract all their taxes. That's the point. If you're not doing that, comparisons with subsidies to other industries are going to meaningless.

[Dylan16807]

You subtract the taxes specific to the industry. Not all their taxes. Are there any such taxes?

[ajss]

I subtract all their taxes. If Exxon pays $100bn/yr in various normal taxes, and the government pays them $1bn/yr in fossil fuel subsidies, that's a net subsidy of -$99bn/yr.

How can it be a fair representation of their situation to only say they receive $1bn/yr in subsidy?