GM CEO calls for $1 gas tax hike

@CNNMoney June 7, 2011: 2:28 PM ET

NEW YORK (CNNMoney) -- General Motors CEO Dan Akerson said his company and his industry would be helped, not hurt, if consumers paid higher gas taxes.

In an interview published in Tuesday's Detroit News, Akerson floated the idea of a $1 a gallon increase in the gas tax as a way to encourage buyers to purchase smaller, more fuel efficient cars. Greg Martin, spokesman for GM's Washington office, confirmed that the quotes reflect Akerson's and GM's view.

Akerson said he would support a jump in the gas tax if it came instead of tighter fuel economy regulations that GM (GM, Fortune 500) and other automakers will have to meet in coming years. By the year 2025, automakers could be forced to hit fuel economy averages of as much as 62 mpg.

Akerson said that a higher gas tax, including an immediate 50-cent-a-gallon increase to take advantage of recent declines in gas prices, would probably make some of his Republican friends "puke." But he said it would do more to help the environment than the pending fuel economy rules.

Could driving tax replace the gas tax?

"There ought to be a discussion on the cost versus the benefits," Akerson told the paper. "What we are going to do is tax production here, and that will cost us jobs."

Martin acknowledged such a gas tax hike would be very difficult, if not impossible, to pass, and added that GM is not going to actively push for a gas tax hike as part of its legislative agenda.

"As a company we understand that's a decision that resides with Congress and policymakers," he said.

The current federal gas tax is only 18.4 cents a gallon.

GM has gained U.S. market share so far this year, even in the face of rising gas prices. It has the best selling compact car in the country, the Chevrolet Cruze, which was introduced to showrooms in November.

At his first annual meeting since the company's initial public offering, Akerson told shareholders GM has been able to weather the storm of high oil prices even better than it expected when it was making contingency plans last year.

"I maintain these are the right vehicles at the right time in our history," he said.

Still, U.S. automakers have traditionally shuddered at the idea of high gas prices. That's because higher prices can lower the company's revenue and profitability since smaller, more fuel-efficient cars have lower sticker prices and profits for the automakers.

Higher pump prices can also slow the economy as a whole. Earlier this year Akerson told CNNMoney that if gas hit $4.50 a gallon, "you would probably see people stop visiting our showrooms."

But Paul Ballew, chief economist at insurer Nationwide who was formerly a director of sales analysis at GM, said it's always been clear within the auto industry that given the choice between tougher fuel economy standards and higher gas prices, the latter is a better deal for the automakers.

"They're not going to get it though, because that would take a lot of sanity in Washington and we're not going to see that," he said. To top of page

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