Illusional Delusion

Greg Mankiw: Swap the Payroll Tax for a Gas Tax

I would agree with Mankiw and some other comments posted here. Luxury spending is the most obvious difference among the different salary groups and taxing oil will mean that those who spend more, driving or shopping, will be taxed more.

The only drawback, ignoring the fact the infra is built around cheap oil, is that this will reduce consumer spending, but I don't think that will be a big issue, thinking that cheap credit has made people spend too much already. Also, the most direct way to reduce the dependence of oil is to remove its advantage, its cheap price. That in turn will divert attention to building better infra where public transport will play a bigger role in the country.