Question

Why does an excise tax on gasoline exist? Check all that apply.

to make gasoline prices more competitive
to provide funding for healthcare services and education
to discourage travel by automobile by making gasoline more expensive
to fund highway repairs and other special projects
to discourage the use of alternative modes of transportation

Answer 1

Select:
- to discourage travel by automobile by making gasoline more expensive (Yes)
- to fund highway repairs and other special projects (Yes)

Not correct:
- to make gasoline prices more competitive (No)
- to provide funding for healthcare services and education (Generally no — gasoline excise revenue is usually earmarked for transportation; in rare cases some jurisdictions may divert revenue to general funds, but not the primary purpose)
- to discourage the use of alternative modes of transportation (No — an excise tax on gasoline makes driving relatively more expensive, which would encourage, not discourage, alternatives)