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Do Roads Pay for Themselves? No -- But They Could
Erica Barnett, 21 Nov 07
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The Sightline Institute recently linked to an analysis by the Institute of Transportation Studies that asked a simple question: "Do motor-vehicle users in the US pay their way?"

Unsurprisingly, the answer was no. Between highway spending, transportation bonds, police and ambulance services, legal and judicial costs related to driving, and the military costs of maintaining a steady supply of Middle Eastern oil, the taxes paid by drivers fall far short of the public spending needed to support driving. If you think of expenditures on highways as money out, and taxes paid by the people who use highways as money in, the "budget" for roads is far from balanced. In fact, the shortfall was quite dramatic: "approximately 20-70 cents per gallon of all motor fuel" consists of government subsidies -- that is, funds other than the taxes and fees paid by drivers.

In the US, federal, state, and local governments spend more than $100 billion every year to build and maintain roads and provide road-related services (such as highway patrols) for drivers. They make up the difference between what they spend and what drivers contribute by throwing all sorts of other taxes into the pot: income taxes, sales and use taxes, property taxes, and business taxes, to name a few. Even if you don't drive, in other words, you're still subsidizing someone else's driving.

A "fair" or equitable system -- one in which, in the words of the report, "the government highway and motor-vehicle exercise operate[d] with a balanced budget" -- would take in $100 billion exclusively from drivers to pay for those roads and services. Obviously, that isn't happening.

So what can be done? Looking at other countries, particularly in Europe, it's clear that the situation in the US isn't inevitable. According to a 2005 study by the EU-funded UNITE project (UNIfication of accounts and marginal costs for Transport Efficiency), tolls and other taxes far exceeded government spending on roads and vehicle infrastructure except in one case (Hungary), and even exceeded total "social" costs (including externalities such as air pollution, accidents, and global warming) in more than half.

The difference appears to be that European countries charge drivers closer to (or, in some cases, more than) the true cost of driving; according to Sightline, somewhere between 1 and 3.5 cents more per mile. European countries also have adopted very different pricing schemes than those in the US, relying far more heavily on tolls, congestion zones, restrictive parking policies, and direct carbon pricing (charging more for larger trucks, for example) to make sure the economic burden doesn't fall disproportionately on those least able to pay for it -- rather than general taxes that tend to be regressive, such as sales and property taxes. Here in the US, policymakers could learn a lot from Europe's forward-thinking transportation planners and political leaders.

Image: flickr/Bachir

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Comments

Hmm, I can see those who rely on transportation for their livelihoods (e.g. truckers) on strike blocking the highways. I do agree though. If the highways aren't paying themselves, they better start. This can be the beginning of a shift towards more infrastructure for public transportation. That brings me to the question that I don't know if you know the answer to either. How well does public transportation pay for itself? There is always pressure to keep fares low, is it too low?


Posted by: Allain Barnett on 21 Nov 07

I am not sure we will have a better world necessarily by taxing all perceived evils, inconveniences, and all those factors which some view to 'compromise' the idyllic version of what mother earth should be.
Aside from the sociological issues of creating 'us/them', abrasive dichotomies; fostering a culture of 'paying for each and every sin you have'; and creating a polarizing effect that makes all 'moderate, central, and compromising views' run for cover; this type of thinking starts us down the slippery-slope of creating a fee-based society which charges for every experience, item, and journey. What do we exempt as good, free experiences? - and which are evil and to have a toll attached? Is it worth discerning and segregating? Is the long drive to the organic pumpkin patch out in the country with your family where no bus will go and the roads are not cycle-friendly, a taxable item?
In the same way that it is appropriate to teach the good as well as the bad - so that we may appreciate the other, it is positive to accept that each and every person has a set of vices. And that we should look at the general 'hue' of goodness that surrounds the person's lifestyle rather than nit-pick over their positives and negatives. And how do you tax that - you don't. You step back and look at the bigger picture. Roads as a relevant example are both potentially life-diminishing - as a vice - and hopefully experience-promoting - as a virtue -- like most experiences -- and most people.
I think that we need to be a bit more sophisticated in our thinking of ways to bring everyone's chosen lifestyles together into a mutually beneficial society. For one, instead of promoting 'negative reinforcement' (i.e. punishment for bads, punitive taxes, and open discouragement of behavior); we need to supplement, advance, and encourage 'positive reinforcement' that provides benefits for positive acts, behaviors, and ideas. The key is to have faith that the positives from these increasing benefits will outweigh the negatives of those that do not yet realize their potential for using technology and knowledge for 'minimal sacrifice' world improvement. We need to further believe that these conflicts 'car/bike' 'city/country' 'nature/technology' are not competing teams that are readying for battle, but sources of ideas for a more complete (albeit complicated) world.
I always believed that 'Worldchanging' was about taking peoples existing value systems, technologies, and the broad range of personal experiences of all who come here as a resource for change and improvement; then critiquing, encouraging, and reinforcing them. The key here is to have faith that these value systems, technologies, and people will be enough to overcome the world's problems - we must believe it - there is no other way.
Embrace the technology, the people, and the ideas in a positive light - as a force of positive change, we can win -- as a divided group - fighting and bickering with each other - not a chance.
Embrace your's (and the un-taxed road's) inner goodness and see the bad as an opportunity to push yourself (and the use of roads) to overcome the negative. Punchline: Increase and revel in your positives (through tech and knowledge distribution), but accept your non-excessive negatives with good humour.


Posted by: Jer on 22 Nov 07

As much as I see the waste in users of the roads - it seems somehow unfair to go after all users for infrastructure that is only buildable and maintainable if we all get together and invest in it through taxes. Breaking up costs leads to loss of benefits due to 'economies of scale'.
Why tax at all - why not have each transit user pay the true cost of the subway/ train/ bus ride and its entire life cycle - i would be willing to bet that the increase to fares of regular users would be greater than the taxes they pay that contribute to transit - by several times - but now its at the fare-box.
The point seems to be that deciding what is good and what is bad and thus taxable seems more likely to encourage conflict and litigation than improved infrastructure and real solutions.


Posted by: Hadrian on 22 Nov 07

I am not sure that I agree necessarily with the position that motor-vehicle users do not pay their way.
I didn't see any reference to a breakdown of the demographics for tax-payers. One could argue that because car-owners and/or primary car-users are likely richer than regular transit users (who knows? but i don't think it's too much of a stretch) and that therefore pay higher taxes, the amount of revenue might be much higher. Just the idea that the top 5% of people earn (let's estimate) 70-90% of all income and pay at least 50% of all personal taxes (as a guess as well). I would argue that transit-users are far under-paying the true value of running their transit system.
we would have to breakdown the number of miles of road used by cars vs all other types incl. buses and taxis - compare that to the tax paid by each individual.
But what good would this do? Create conflict.


Posted by: Jer on 22 Nov 07

It seems from here like fuel taxes would be the most equitable way to address the fairness issue, rewarding carpoolers and drivers of more efficient vehicles, and, so long as diesel is taxed equally, placing a properly proportionate burden on the huge amount of commercial traffic that transports goods across the country. Absent that, what you have is non-highway, general revenue taxes being used to subsidize businesses which rely on the transportation infrastructure to get their goods to market. I agree that there is some public interest in not having a completely fee-based system, just as there is public interest (for environmental reasons, at least) in having affordable public transport supported at least in part by general revenue. But right now, as this article points out, the imbalance is skewed in the direction of a level of public support that amounts to, in effect, a direct subsidy to those who use the highways most; and I strongly suspect that the group most benefitted is commercial trucking.

For those who would protest that calling for that group to pay their fair share is an assault on free enterprise, I might only suggest that a discussion might be in order on the extent to which "free" enterprise should be government-subsidized.


Posted by: bob on 24 Nov 07

Two thoughts : 1. solar roads 2. toll/trafficking
1. So much surface area, in constant sunlight. Tar is black, it absorbs heat. Could a road surface be turned into a power source?
Whilst I like the idea of solar panel roads, I think their cost would be prohibitive - alternately - lay tubing under the surface with a low boiling point fluid (I believe ammonia might have the right properties) to spin micro-turbines, and have the gas non-return valved into a buried heat expelling cooling tank.
(Small turbines - )
The advantage here is that it can be reverse engineered into existing roads - or any flat, sunlit asphalt area, like car parks.

2. Toll Trafficking
When taxes, tolls and tariffs create disparity between
how much is paid and how much it's worth, you get crime. If you create a BIG disparity, you get organised crime - consider cigarette smuggling. They're legal, but taxes and tariffs make them expensive, and if Organised Crime can find a way to smuggle them at cost price and take half that tax as profit for themselves, they will. Heavy widespread tolling, however justifiable, will produce a huge market for fake Toll ID's, 'back way' routes (with safety and ecological consequences) and traffic jams in housing areas that bypass highway Toll entries.

Worse, if Toll systems are not to unfairly penalise the the wrong people, they require ever more invasive surveillance systems to 'means test' drivers as they pass onto a road; you would leave a credit trail defining exactly where you were all the time.
If the Toll system is applied evenly, that could trap low-income people in economically disadvantaged areas.

A below-poverty line commuter finding a dollar or two Toll between him and his work is going to bite...the further he must travel, the more Tolls, the less economic working at range becomes - and up go invisible walls of economic barriers.

In short - I'd prefer the roads do more to pay for themselves, rather than a punitive 'false scarcity' model, and if they can resolve another problem (power) at the same time, so much the better!


Posted by: John on 25 Nov 07

This article does fail to take something into account. While a person may not drive on the highway in a private car or at all, they still benefit from the roads. Public access roads facilitate the cheap transport of many goods and services and are a major economic easement.

An example:
I work from home and grow all my own food (I'm a vegetarian). One day, my computer goes crazy, I must call the IT office at work and ask for assistance. That person probably drove to work. Later that day, because I can't work on my computer, I'm frying up some eggplant when a towel catches on fire and quickly spreads. I call the fire department, who arrive on the road. Once all the cleanup is done, I take out my trash, which is picked up by a garbage truck, on the road. To relax after my hectic day, I have a nice cool organic beer shipped in by a truck that used the road.

I never once used the road, but I still relied on it pretty heavily and so am willing to pay taxes on it.


Posted by: Marty on 26 Nov 07

One thing I'd encourage everyone to remember about the United States is that it's not just a country, it's a continent (no offense intended, Canada and Mexico and the other cute little countries in the thin part down there... I'm just making a point about size ;-) ). In Europe, where a country is the size of Indiana, or maybe Oregon, a different view of trucking and road use naturally will exist from the view we have here. Our economic infrastructure is completely dependent on road use and long-haul trucking. All of those wonderful items in your local Whole Foods... how do you think they got there?

Don't forget... the distance between London and Moscow (in other words, the entire width of Europe, more or less) will roughly get you from Boston to Wichita, with about half the United States left over. We're a very, very big nation.

I personally love driving, and I encourage everyone to take a cross-country drive at least once in their lives (oh, how, unecological of me), just to appreciate how vast and diverse the United States is, and to understand the scale and size that we have built-in to our economic transactions and our transportation systems. The price of oil doesn't affect individuals all that much in terms of their own driving, but don't forget how it affects the cost of transportation that goes into all of the goods and services that we consume. Changing the way we charge for roads on top of that is not something that easily could be absorbed by those who rely on our supermarkets and big-box stores, I suspect.

The Interstate highway system was created by Eisenhower in response to the realization that transportation connectivity would spur growth and ease barriers to movement, and it's been wildly successful. Keeping our highways as a more-or-less government funded resource through general taxation just makes sense as people from everywhere rely on that infrastructure pretty much equally no matter where they live.

I guess all I'm saying is that it's a really, really complex issue that has roots as deep into our economic infrastructure as anything. Don't just think of it in terms of commuters, or "I'm urban and don't own a car"... think of it in terms of the fact that there are millions of trucks moving goods all over the 50 states right now, as you read this, day or night, goods that you'll be consuming, and consider the effects of any policy changes with that knowledge in mind.


Posted by: Scott on 29 Nov 07



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