Through tax revenues and induced effects, cross-border activity can have an impact on a state's entire economy. A second reason for economic loss is what might be seen as subsidiary sales losses. As residents engage in cross-border activity, they may also purchase other items. That is, a resident who stops to purchase gasoline in a neighboring lower-tax state may also buy other items. The third key loss is that direct sales losses and subsidiary sales losses both lead to a loss in government revenue, which was the reason taxes were set at high rates in the first place.
Governments lose a whole host of revenues including, most obviously, sales and excise taxes.
Finally, beyond leading to cross border activity, excise taxes, like all taxes, have a depressing impact on the economy. As discussed above, higher taxes force people to spend less and generally slow economic growth. Perhaps the excise tax with the greatest potential for economic harm is the gasoline tax. This tax increase would translate into 537,000 jobs lost over five years, hitting particularly hard the automobile industry, the energy industry and the trucking industry. Other studies have shown similar overall adverse results from higher gasoline taxes.