Wednesday, November 15, 2006

Toll vs. Tax

Greg Mankiw recently has been pushing his Pigou Club, a call for higher gas taxes. Higher taxes naturally sit uneasy with me, but I really didn’t bother trying to figure out if anything was seriously wrong with Mankiw’s reasoning. Today Tech Central Station published an article on some shortcomings of a higher gas tax. A good point that author Ted Balaker brought up was

Our reliance on gas taxes means that drivers pay for roads when they're at the gas station, not when they're actually using them. The result is traffic congestion.

It doesn’t matter how much the tax is, after it’s paid for it’s a sunk cost. Hence a massive decrease in congestion most likely won’t result.

And sky-high gas taxes havn't reduced driving as much as one might expect… Over there [in Europe] per capita driving has been increasing more than twice as fast as in the states. Higher gas taxes haven't spared them from pollution or traffic congestion either.

But by charging for driving on the roads – making them toll roads – congestion will decrease. This is a far more effective means to reach the Pigou Club’s objectives.

If our system were toll-based instead, motorists would pay for roads only when they actually used them. They would think more carefully before piling on the road at rush hour. Tolling, especially the kind of variable tolling used on the 91 Express Lanes, does more than give motorists speedy and predictable trips, it's also easier on the environment than stop-and-go traffic.

1 comment:

Anonymous said...

I take it you don't drive much Warren.

"Our reliance on gas taxes means that drivers pay for roads when they're at the gas station, not when they're actually using them."
So where else do you use gas? Gas is for cars. Cars drive on roads. So unless you're going to put toll booths on every road, side street, alley using tolls as a mean to pay for roads you use is useless. How much would you charge for someone driving half a mile for groceries? Or a mile to the furniture store?

Tolls actually increase congestion. Listen to the traffic reports. Apart from accidents, most of the bottlenecks are around around toll booths. Then you have the congestion caused by people trying to avoid the tolls. Electronic payment helps alot, but not everyone has them or trusts them since they are part of the government.

Jason