Mike Jackson, CEO of the nation’s largest auto retailer, tells Fortune’s Carol Loomis that the U.S. needs higher gas taxes

Tell me your opinions about the price of gas and what might be done to influence it?

I think we need a revenue-neutral gas tax that puts a floor under the price of gasoline at around $3.50 to $4. The price of gas totally determines the types of vehicles that people buy and how they use them. The fact that America has ignored this reality is the reason why our energy policies have failed for 50 years. With gas now around $2 per gallon, it won’t be possible to sell fuel-efficient vehicles. Already, another great migration away from them is underway. I’ve seen this movie three times in my career.


How would you establish a price floor?

Through taxation. But it doesn’t need to happen by next month. If you simply announce that taxes will be put in after the economy recovers, in 2011 or 2012, people will start now to factor that into their decisions.


And how about your revenue-neutral point?

This would be a very painful, regressive tax, which needs to be rebated quickly–maybe through the payroll tax. If there’s a rebate, I think the political backlash can be handled. The biggest lie in American politics is the following combination: “I care passionately about America’s dependence on imported oil and we must do something about it, and I’m passionate about global warming–and I strongly believe we should have cheap, affordable gasoline.” There’s intellectual dishonesty in those assertions coming out of the same brain and the same mouth at the same time. That’s what Washington has been saying for 15 years, and that position guarantees you failure.


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