How does taxation of fuel reduce negative externalities in the transport market?
Well personally, I would have to say that it really doesn’t at all, IMO Taxation of fuel was to create revenue as an excise tax , here in the US it was hypothecated to road projects, Costs of the gas tax reaches upwards to 64 cents per gallon dependent on the state,but as you can tell most states are not all too worried about the roads right now. You can check your local tax on fuel by going to your State Capitals website. So in actuality you may end up seeing the tax go up in the summer months and beyond because of the state of affairs and dire straights most states are in right now with the economy as bad as it is. The price of oil/coupled with rise in taxes will drive the prices in the high to upper 4 dollar/per range.
