June 20, 2017

TAXING CONSUMPTION:

How Highway Tolls Can Make US Infrastructure Great Again (Robert Krol, 6/20/17, The Fiscal Times)

When we do finally get around to focusing on the president's infrastructure plan, the provision eliminating tolling restrictions on interstate highways deserves particular attention. [...]

First, fuel taxes can no longer be relied upon to provide a stable funding source for highway programs. Fuel taxes currently provide about three quarters of the revenues used to fund the federal Highway Trust Fund, and they're an important source of revenue for state and city highway spending as well. But with vehicles getting better fuel mileage each year, and with the growth of electric cars, fuel taxes may not be effective for much longer. Switching our reliance to tolls will provide a more reliable revenue source for the future.

Second, user fees and tolls are not like other taxes governments use to fund programs. Income, payroll, and corporate taxes alter people's behavior, resulting in fewer hours worked and less investment, causing the economy to operate less efficiently. Tolls also affect behavior, but in a good way. Tolls reduce congestion and pollution.

Congestion is a major problem in urban areas of the country. Variable tolls -- which can be set higher during rush hour drive times and lower during off-peak hours -- create incentives for people to car pool, switch to mass transit and change travel times, reducing congestion. This could potentially save billions of dollars each year in wasted time and fuel.

It's not necessary to toll all the lanes on an interstate to have a positive impact. Tolls can be placed on selected express lanes or implemented to allow solo drivers to use underutilized car-pool lanes. Even this small step leads to improved traffic flows in the non-tolled lanes, benefiting all drivers with faster, more reliable, trips.

Also, with better management of urban congestion, we just might find that we don't need to build as much highway capacity as we thought, saving billions of dollars that can be put to better use.

Posted by at June 20, 2017 8:09 AM

  

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