Go to about 2:17 of the video to get to Colbert's "tip of the hat" to the NC state legislature.
In this particular case, the tax revenue would be used to maintain roads, so taxing hybrid owners to make up for them not paying the gas tax is in line with the benefits principle of taxation, but it fails a basic reasonableness criterion of “tax things you want less of and subsidize things you want more of.” ... I was hoping that this would be an isolated “oops” sort of incident, but apparently North Carolina is looking to follow Virginia’s lead:
Dear North Carolina: You’re doing it wrong. Economically speaking, both Virginia and North Carolina are saying that they want at least some of their residents to switch back from purchasing hybrid cars to purchasing regular gas guzzlers. The most frustrating part is that this makes perfect sense from a self-interest perspective- the state legislature certainly feels a lot more pain from having an increasing budget shortfall than it does from producing some more pollution that everyone else who doesn’t write stupid policy has to deal with. In essence, the externality problem exists not only at the level of individual production and consumption but also at the state regulatory level.