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There is an increasing interest in taxes on energy consumption.

Policymakers should take action to raise revenues, promote energy conservation, and reduce climate change.

Carbon taxes or cap-and-trade systems that would increase energy-related and other prices must include measures to compensate for regional differences in energy costs and to adequately protect cons

Excise taxes are sales taxes on individual commodities, services, or transactions such as motor fuel, cigarettes, or home sales. For example, motor fuel taxes fund highways. 

Motor fuel taxes should be indexed for inflation and increased as necessary to fund transportation infrastructure and services.

Excise taxes on individual commodities, such as tobacco or alcohol, should at least keep pace with inflation. One way to do this is by levying them on an ad valorem basis. 

A progressive income tax is the preferred method of raising revenue at the federal and state levels. Other sources, such as a consumption tax, may be needed. 

Most states and localities generate a significant portion of state and local revenue from the taxation of retail sales. Such taxes are attractive because they are relatively easy to administer.

Due to their regressive nature, raising state and local sales taxes should not be the first choice for increasing tax revenues. 

States and localities should include services in the taxable base to reduce regressivity and improve neutrality.