For the past 50 years, we’ve been relying on the gas tax to pay for U.S. roads, bridges, tunnels, and more. And as we’ve been reiterating for, well, ever since this blog was launched, that method of payment is no longer working. Infrastructure in the U.S. is fast approaching critical levels of disrepair and technological obsolescence, The gas tax is too low to make any serious dent in these problems, and the political barriers to raising it are too high to achieve any real gas-tax coup. Meanwhile, the dogged lack of funding sources has kept the federal surface transportation bill — which is already nearly a year overdue — stalled in its tracks.
So perhaps it’s time to get creative about solutions. Yes, there’s the option of introducing private-sector dollars into the infrastructure fray, through public-private partnerships — a movement that may or may not gain ground in the next few years. But there’s also the option of pulling a little behavioral-economics trick — if people hate paying a tax for gas so much (presumably because they have trouble linking those pump payments to the health of the nation’s infrastructure, and the roads they drive on) then maybe there’s another way to get them to pay the same amount of money for the same goals, but complain about it less.
Which brings us to tolls. Unlike gas taxes, which come on you all at once as you sit there at the Exxon station watching the numbers rise, tolls are more gradual and can be more directly and easily related to the purpose for their existence: You are driving on this road, and this road requires maintenance, so in order to drive on it you need to pay a small toll.
While many might leap to shoot down any pro-toll movement, there’s some evidence that American drivers are far more likely to pay more tolls than they are more taxes. The latest America THINKS poll by HNTB Corp. found that the 1,005 people surveyed supported tolls on roads and bridges to generate transportation revenue, especially those that save them drive time. And when given a choice between 1) new roads funded by a higher gas tax, 2) new roads funded by new tolls, or 3) no new roads at all, the survey respondents preferred tolls (41%) or no new roads at all (41%) over increased gas taxes (18%).
Granted, this potential love for tolls isn’t unlimited — 61% of respondents said they’ve purposely avoided a road or bridge with tolls at least once. The reasons are what you’d expect: 43% felt that tolls are too expensive, and another 24% think of most toll plazas as high-traffic areas. The latter assumption is often true, and could be a barrier to adopting the more-tolls-less-taxes model of transportation funding. But then, if we collect more cash through tolls, then perhaps we can devote more money towards fixing the larger problem of congestion as a whole. The bottom line is that we need to figure out a way to refill the Highway Trust Fund and drag our infrastructure out of the proverbial stone (or gravel) ages. If that means doubling toll plazas in the country’s most congested areas, well, perhaps American drivers can stomach it.
July 26th, 2010 at 2:03 pm
Here is a stimulus project for you: Nationalize EZ Pass, and develop a 10 year plan for converting all tolls in the US to high-speed tolling stations.
The amount of congestion caused by manual toll plazas is immense. National requirements for EZ Pass (and funds for upgrades) would untangle many of these bottlenecks. It would be interesting what the savings in fuel costs and emissions from reduced idling would be.
Once the traffic is flowing more freely, then it becomes much easier to sell the toll expansions and price increases - because those increased payments would all occur invisibly as we speed through the fast EZ Pass tolls.
July 26th, 2010 at 2:05 pm
The problem with tolls is that they only really work on major bridges and tunnels and freeway-style facilities. They’re not going to work on an at-grade arterial, or the 2-lane rural blacktop that urban dwellers may not think much of but is vital to the farmer. So there will still be the need for some tax-based financing mechanism.
July 26th, 2010 at 2:15 pm
We will inevitably need to move in the direction of tolls…not because the gas tax isn’t viable now but because cars are moving away from gas. Personally I would love to see a toll that records when you get on the freeway and when you get off the freeway and charges you a fixed price per mile based on vehicle weight.
July 26th, 2010 at 2:42 pm
Consider what would happen if half the people had electric cars. They wouldn’t pay a dime in gas taxes, and road maintenance costs won’t change. We all agree that the funding mechanisms are broken, but until the Republicans rejoin the world of the sane I don’t think that any solutions will be possible.
Thus I suspect we are moving towards having more tolls - not because it is a good idea, but it the only thing that few people seem to be dead-set against. Secondary roads are also a concern of course - my guess is that the tolls on the interstate highways would free up some amount of funding for the secondary roads, but it still won’t be enough.
July 26th, 2010 at 2:54 pm
We absolutely need a combination of variable tolls and a per-mile use-tax.
The tricky part is getting people to understand that this ISN’T double-dipping into their wallets. A per-mile use-tax paid when a vehicle registration is renewed (or through a 12-month “payment plan” following an odometer reading at registration time) is essential to cover facilities where it would be difficult (for whatever reason or reasons) to install tolling facilities, such as residential streets, country roads, or urban areas with a comprehensive grid layout. These funds would essentially go straight into a general pool of maintenance funds to be distributed equitably through a formula that has (possibly) not yet been devised.
In addition, some facilities need to be priced variably based on a variety of reasons. Bridges and highway lanes need their capital costs to be paid for; preferably the direct-beneficiaries of the facility (the users) would pay the largest share of these capital costs through tolls. Additionally, very high-traffic facilities need more-frequent maintenance, and the users of the facility should be charged a little extra for this as well, based on a weight/axel/mile formula. Also, tolls on any road where feasible (not just new or high-maintenance facilities) should be market-rate depending on demand, so when the facility nears 100% capacity the prices have to go up to reduce demand and provide paying customers with more value for their contribution.
This isn’t going to be popular, but neither are crumbling roads or bridges.
July 26th, 2010 at 3:24 pm
The problem is balancing the two topics. On the one hand, increased gas taxes provide an excellent short-run way of convincing consumers to move to alternative-powered vehicles. However, you’ll increase the overhead for industrial, transport, and agricultural operations, the latter of which are already experiencing strained margins.
Tolls provide a solid longer term solution, but excessive tolling will drive down asset usage. A good example of this is the cross harbor bridge in Tokyo that costs something like $50 to use when it opened up but saved a large chunk of driving time, and saw low usage as a resutl of the price.
The ideal solution would be to encourage a shift into higher percapuita transit usage by funding newer more efficent transit systems (including a wide-spread roll out of light rail and HSR) with the tax revenues and toll increases, but not so much as to completely wipe out the funding sources by totally negating highways and driving as a travel option.
A tricky topic indeed, but ultimately one that can be aided by advances in technology and wise foresight in legislation.
P.S. EZ-pass is wildly outdated, and a new system needs to be rolled out before a nationalized plan can be enacted.
July 26th, 2010 at 4:23 pm
I have been calling for this for years. Seriously. If we want nice things, we have to pay for them some how. We don’t need to toll all of the roads. Just the limited access highways and bridges, then, the current gas tax will be more than enough to fund maintenance on the rest of the nation’s roadways. It will also make transit options more appealing. Suddenly, if you are paying out of pocket $4 in tolls to get to work, paying for a $4 rail ticket isn’t such a bad deal.
July 26th, 2010 at 5:52 pm
The problem with any other funding mechanism (such as per-mile taxes) is that one needs to figure out how to enforce it and prevent cheating. It is relatively easy to roll an odometer - even for newer cars with the electronic odometers, there is software out there that one can use to “reflash” a new setting.
What else would you use? Transponders in each car? What about older cars that don’t have one? How do you collect the data without people worrying about the your GPS coordinates being sent to the government on an uplink of some sort.
You could in theory have something built into the ECU that tracks mileage, but here again - the people who chip engines have the means to alter the settings.
A tax on tires? Perhaps, but tire lifetime is only a rough estimate, and a large tax on tires would encourage people to drive on old bald tires until they blow out.
July 26th, 2010 at 8:18 pm
Toll roads require a toll both at every single entrance and/or exit, a significant increase in infrastructure. Toll booths cost money and they stop traffic. A gas tax is more convenient for drivers and eliminates the extra costs associated with collecting tolls. As an additional benefit, a gas tax encourages people to drive vehicles with better fuel efficiency. A gas tax is clearly the more efficient alternative.
July 26th, 2010 at 8:23 pm
The only practical per-mile tax would be to charge people when they register their vehicle, based on their odometer. This would make it possible to tax electric vehicles as well.
July 26th, 2010 at 8:30 pm
“Toll roads require a toll both at every single entrance and/or exit, a significant increase in infrastructure. Toll booths cost money and they stop traffic.”
No they don’t. Dallas had toll-booth free tollways for a while now. They just ask everyone to buy a toll tag and send a bill to everyone that doesn’t have one. They use cameras to capture license plate numbers and mail a bill after you rack up a certain amount. They have lost a little review from it, but it would still be a much easier solution than building out massive toll boothes like the picture above.
July 26th, 2010 at 8:44 pm
Let me rephrase: Toll roads require a toll COLLECTING DEVICE at every single entrance and/or exit, a significant increase in infrastructure.
July 26th, 2010 at 9:46 pm
The problem with the way this discussion is phrased is that any politically-controlled institution will be under pressure to provide freebies. It doesn’t matter whether the fees are tolls or gas taxes. Transit authorities are not allowed to raise fares, and the tolling authorities will not be allowed to raise tolls to the point that roads are self-sufficient.
July 26th, 2010 at 10:29 pm
A lot of anti-transit people make an invalid argument that if transit money wasn’t taken from the gas tax, roads would support themselves. Although this is completely bogus, I think two things should happen. The deficit and national debt is huge, no matter how much spending cuts the government makes, we will still need to raise taxes. 1. The federal gas tax should be used only for highways. This way, if there is ever a shortfall, which there will be, it can’t be blamed on any transit funding. Add a stipulation that gas tax revenue must be raise in order to meet spending levels. 2. A national Value Added Tax (VAT) should be introduced, say, maybe 10%. Provide an income tax exemption for everyone making say $100 K - $125 K and below. This revenue figure would be absolutely enormous. Designate a set percentage for transit funding, a set percentage for a new national inter-city rail construction agency and a set percentage for Amtrak operations and capital requirements (not including track work - this would be taken up by the new national agency). Dedicated revenue for transit and rail, and there are no longer any scapegoats for highway funding.
July 26th, 2010 at 10:30 pm
Oh yeah, and the remaining amounts could be used to pay off the deficit and the national debt.
July 27th, 2010 at 4:57 am
Kyle, you are aware that the majority of income taxes in the US are collected on income $100,000 and below, right?
The problem of transit funding in the US is only partly one of transit funding. It’s also one of massive government waste, created, ironically, by the people who are the most against government spending. (Often, starve-the-beast conservatives note that if government is too efficient then people will demand more of it.)
July 27th, 2010 at 6:10 am
Why would any of these systems be more effective than the existing gas tax? The gas tax is a very effective mileage based fee system. The problem is that politicians have raided the money thus collected to pay for things other thantransportation infrastructure. That won’t stop just because you find another way to collect it. There is the problem of alternative fuel vehicles (plug in electrics have the potential to be a very large problem) but the big problem is to keep the politicians from raiding the the piggybank for cash to balance the general fund!
A local politician came up with an idea similar to this a couple years back that would have required all vehicles to be equiped with an electronic device (similar to EZ-PASS) that would charge low toll rates automatically on most major roads. There was intense opposition from ‘I don’t want the Gov’t tracking where I drive’ as well as how do you enforce the use of the transponders, especially on through traffic?
July 27th, 2010 at 7:20 am
I am aware of the vast sums collected by income tax under $100 K, but have been told that a 10% VAT would make up for all of those costs and much more. I personally haven’t run the numbers, but I know the level of consumption by the American consumer is immense.
July 27th, 2010 at 11:25 am
pay for your own damn highway like we did… I don’t think this nations “infrastructure” is in dire straights as some would like to believe but as much as it kills me to say this we do need a higher Gas Tax however this is to dedicate this to more better transit solutions than Freeway building
July 27th, 2010 at 11:30 am
BobS, the gas tax is effective at charging people based on their fuel usage, not their road usage. I don’t believe that the fuel tax should be entirely eliminated; it should be reintroduced as a gas sales tax (% of sale, not a set amount per gallon) to cover the myriad problems (health, environmental, social) caused by the extraction and processing of oil into gasoline. With only the gas tax, you could have a heavy electric-drive vehicle that causes inordinate wear and tear on the road system but the owner would never contribute to the maintenance for the roads they use. Thus you have a system where infrastructure use is not paid for equitably by the users of those roads. We need a system where the users of the road pay for the construction, maintenance, and operation of those roads. Currently the gas tax, which does not get adjusted for inflation, is far too low to cover road maintenance, let alone capital costs for new highways springing up nationwide, even if transit funding came entirely from another source. The gas tax in it’s current incarnation is a failure and is not living up to it’s stated goals.
July 27th, 2010 at 1:31 pm
Based solely on vehicular wear and tear (climate wear not factored); private passenger vehicles do very little harm to our road infrastructure. Commercial trucking does most of that damage. Perhaps a contributing part of the solution could be to encourage more freight rail.
I would be interested to understand whether existing tolls per axle for trucks really take into full understanding the entire burden they place on our highway infrastructure. Commercial trucking is highly damaging to pavement and bridges, creates traffic delays and horrible accidents, creates massive air and roadside tire pollution, and is inefficient at fuel consumption per ton of freight ratio. Localized trucking would obviously still be needed to distribute freight from rail yards to final destinations, but using more freight rail could ease these problems at the interstate commerce level.
July 27th, 2010 at 1:41 pm
Is it fair to assume that city busses would not be required to pay a toll? If so, and the gas tax is elimnated, then suddenly without raising fares, the municipal transit authorities have more money to invest in building their lightraisl and streetcars and paying workers. That is unless they already receive subsidized gas, I don’t know. But it would be a way to boost public transit.
July 27th, 2010 at 2:55 pm
Joseph - I agree that elctric vehicles will drastically skew the equation of fuel use compared to road use. That is why I said alternative fuel vehicles will be a concern. I’m not sure that the gas tax has been a failure. At least in my area the large amount collected from gas tax that was supposedly set aside for road maintenance/construction has been syphoned off to fund general fund projects by replacing the money with IOUs from the general fund. Several less than successful mass transit projects have also sucked a lot of money out of the ‘Transportation Trust Fund’ that was created with the gas tax. So I’m not sure if we know if the gas tax would have supported maintaining the road network since the politicians couldn’t keep their hands off it. I don’t see a reasonable universal replacement for it.
Someone else asked whether heavy trucks paid their fair share. That is another sore point the Trucking Lobby has continually kept the contribution by heavy vehicles much below the actual cost of the damage they place on the roads. The trucking industry has been living on subsidised roads since their creation. While Rail had to build their own infrastructure the trucking industry had the gov’t do it for them then lobbied their way into lower ‘impact fees’ than personal vehicles pay
July 27th, 2010 at 7:06 pm
Kyle: you’ve heard wrong. In times of growth, federal taxes are about 20% of GDP. Because consumption is about 70% of US GDP, a no-exception 10% VAT would bring in 7% in revenue; start putting exceptions on staple goods like food and rent, and it goes down to about 4%. In other words, it’s not enough.
July 27th, 2010 at 9:55 pm
Kyle, regardless of what you have been told, a 10% VAT is nowhere near enough to eliminate income taxes below 100k. Try 20%+.
Also, the federal highway system does NOT pay for it itself with fuel taxes and fees. The last time I saw the data, DoT brought in $32 billion in fuel taxes and fees (some of which was then diverted to other forms of transit), but spent $40 billion on the highway system that year. Local and state roads are even worse, and usually less than half of their funding comes from gas taxes, fees, etc. Overall, I have read that about half of our road spending comes from general taxes, the other half from user fees and fuel taxes. Ironically, this is about the same as “public” transportation.
July 27th, 2010 at 11:10 pm
I guess I did hear wrong. But transit and rail need their own dedicated revenue source, or at least a dedicated percentage from the general fund. That way, with gas taxes only going towards highway funding, the pro-highway lobbying group and anti-transit politicians can’t blame the lack of highway funding on anything other than a lack of gas tax revenue.
July 28th, 2010 at 1:57 am
Lockboxes don’t actually make lobbies go away. After all, all gas tax revenue went exclusively to roads for most of the history of the US highway system, and the highway lobby still kept complaining that the roads were in poor condition and needed more government money.
July 29th, 2010 at 9:21 am
[...] Is the Gas Tax Worth the Heartburn? (Infrastructurist) [...]
July 29th, 2010 at 9:25 am
[...] Is the Gas Tax Worth the Heartburn? (Infrastructurist) [...]
July 29th, 2010 at 9:57 am
We ARE paying taxes now on other things, that if OBAMA would stop sending it to Iran or Afghanistan, or other countries we have conquered to rebuild them (I still dont get that) THEN we could use it for rebuilding OUR OWN COUNTRY instead.
This is a no brainer folks,,..
But Noooo he is redistributing OUR wealth to THEIR countries while we are driving on dirt roads with pot holes.
July 29th, 2010 at 10:26 am
I think we tend to over think these issues. Any tax or revenue should have a specific purpose. The law should specify this direct purpose and Congress should not have the ability to divert. If Medicare/Medicaid does not have enough money than specifically increase this tax. If Social Security needs more money then increase this tax. I can see this right on my paycheck. Then I know what I’m paying and what I’m getting. Simple concept.
I think tolls and the gas tax are outdated period. I think a mileage usage rate should be established based on vehicle weight and axle (car, truck, RV, Bus, semi, motorcycle, etc.) and you should pay this “road/highway maintenance fee” at registration. There will always be a way to cheat and people will manipulate to there advantage.
They should establish a “minimum” fee and mileage should be simple to track. A vehicle history could show year over year increases. Why would anyone register a car that is not driven? The mileage should always go up and a simple tracking system could keep up with this. Simple concept.
Any other transportation system deployed (rail, bus, etc.) for public transportation should charge enough to cover its own costs. One of those costs that they would pay is this “mileage fee”. Simple.
July 29th, 2010 at 1:14 pm
thanks tina, this thread needed someone like you to end this otherwise smart and informative dialogue
July 30th, 2010 at 8:48 am
Chad: the only reason federal spending on highways exceeded the revenue generated by the gas tax is because Congress “bailed FHWA out”. Instead of looking for a permanent solution, they simply transferred $8 billion from the Treasury to the Highway Trust Fund. Aside from that and the “bailout” a couple years ago, Federal highway spending has always been covered by gas tax revenues.
July 30th, 2010 at 5:30 pm
>>Granted, this potential love for tolls isn’t unlimited — 61% of respondents said they’ve purposely avoided a road or bridge with tolls at least once.
Count me as someone who purposely avoids toll roads nearly every day. Why pay a gas tax plus a toll when I have an alternative?
August 24th, 2010 at 3:54 pm
We have such a wonderful system here in New York City. It’s called the MTA. Now most of you might know them as the folks that run our oh so wonderful bus & subway system here. And they do. But guess what. They also run the bridges & tunnels here. The Triborough, Whitestone, VZB, Midtown Tunnel, Brooklyn-Battery tunnel. The current cash (as opposed to the EZ Pass) rates are $11 round-trip. Yes, $11 round-trip. That fee generates a surplus. Guess where the surplus goes. To the LIRR & Metro-North railroad as well as a little bit for our buses & subways. So now they are planning to jack-up (and I mean really jack-up) the tolls & fares starting next year. Why is it that a bridge & tunnel agency gets to control the bus & subway fares? Why is it that the tolls go to railroads? If there was competition, then if the bridge & tunnel folks raised the tolls the bus/subway company could keep the fares the same and encourage more mass transit. But here the same agency gets to jack-up all the fees, so someone who drives to work doesn’t see any real change to cost-benefit analysis they might do.
Yes, I know the history of the MTA. But it doesn’t seem right that to encourage mass-transit use, they jack-up the fares to obscene levels. One way they accomplish the increase is by decreasing the MetroCard discount. When the metrocard was first introduced (back in 1999, IIRC) the discount (or more accurately, bonus) was 20%. Buy a $10 card, get $2 added to the card. The bonus is now down to 15% and the current scuttlebutt is that the MTA wants to bring it down to 7.5% (or maybe 10%).
The concept of a dedicated revenue stream is not going to work, as the powers-that-be will always find a way to shift the money to where they want it to go. They might say “It’s for roads” but it will never be a dedicated amount. It will end up in the proverbial general fund just like the lottery is for education. We were told it was for education, and I suspect the implication was that it was a dedicated stream for education. Nope, general fund.
If we could trust the politicians we might have a chance to get the right solution. But we can’t trust ‘em. History has shown that. Hell, current events have shown it.
August 25th, 2010 at 1:10 pm
Yeah, let’s waste ~22% of the money on adminstration costs when we could keep the gas tax and use less 1% of the money collected on administration. Brilliant!
“Toll Roads Mean Billions in Extra Costs for Motorists
Revenue collection with toll roads is twenty-five times less efficient than the gas tax.” http://www.thenewspaper.com/news/24/2438.asp