Transportation

Case Against Highway Tolls is Disingenuous

By Nicholas Kevlahan
Published December 10, 2009

this blog entry has been updated

It's amazing that these arguments about highway tolls are not being made more strongly and publicly. The main counter-argument has already come up in the comments to yesterday's RTH article: it is "unfair" to put a price on roads when there isn't viable transit.

Of course, this is not actually an argument against tolls per se, but just an argument about what a fair price is. This discussion is also really about who should pay for highways, since as a society we're already paying the full cost through our taxes.

The best tactic is to set the price at a level that ensures smooth traffic flow (even during rush hour), and then simultaneously make a massive investment in improving transit.

It would also be useful to tell motorists explicitly what the real cost of our roads is, so they don't feel it is free or that they are being over-charged.

In an article earlier this year about high speed rail opposition, I referred to a federal government study that actually crunches the numbers [PDF link] on the cost of roads and highways.

Incredibly, many motorists still believe that fuel taxes actually subsidize other government services!

Then there's the billions of dollars lost to the economy mentioned in the OECD report. This should be added into the cost as well.

The most disingenuous argument is that we should wait until we have a superb public transit system that goes everywhere before making it any more expensive or inconvenient to drive.

Of course, these same people would howl about the huge tax increases required to build the transit system, and complain it is unfair that they should pay since they don't use it (cue HSR's chronic under-funding).

New Market Pricing Options

In yesterday's Globe there's an article about some technology that will make pay-as-you drive insurance, parking and tolls much more efficient to implement.

The risk analysis would be based on driving record, as well as where and when the motorist drives. The risk per km is presumably lower on a freeway than in downtown Toronto. This is really much more intelligent, and makes the market in insurance more efficient (and fairer).

Anything that shifts the fixed costs of driving to incremental per km (or per hour) costs will be helpful.

Kamal Hassan, the CEO of Skymeter, gave some good arguments for a toll system during the live blog [live blog transcript formatted for clarity]:

Hassan: The smartest way to allocate any scarce resource is by pricing. Roads during rush hour are a scarce resource. Right now we allocate them by lining up ... a very inefficient way of doing so. The people willing to sit the longest in traffic are the ones who get that scarce road space.

Globe and Mail: Are we talking about toll roads? They aren't exactly the most popular thing these days...

Hassan: Yes, the principle is tolling. Yes, it's similar to the 407. I remember how when the 407 started all sorts of people said they hated it. Now they use it ... because getting where you're going in 15 minutes rather than 45 minutes is worth a few dollars.

Toll roads are not popular when the private sector takes money away from the citizens. With Skymeter, it is just as possible for drivers to pay for the roads ... and for that money to be used to reduce your taxes.


Update: The link to the Transport Canada study was updated.

Nicholas Kevlahan was born and raised in Vancouver, and then spent eight years in England and France before returning to Canada in 1998. He has been a Hamiltonian since then, and is a strong believer in the potential of this city. Although he spends most of his time as a mathematician, he is also a passionate amateur urbanist and a fan of good design. You can often spot him strolling the streets of the downtown, shopping at the Market. Nicholas is the spokesperson for Hamilton Light Rail.

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By Inhocmark (registered) | Posted December 10, 2009 at 14:16:02

"The most disingenuous argument is that we should wait until we have a superb public transit system that goes everywhere before making it any more expensive or inconvenient to drive.

Of course, these same people would howl about the huge tax increases required to build the transit system, and complain it is unfair that they should pay since they don't use it (cue HSR's chronic under-funding)."

See that is hardly fair and smacks of robbing Peter to pay Paul. If you start putting a cost burden on people without offering them a viable option then all you're doing is overtaxing a segment of the population that is already taxed at quite a high rate. If your area had only one bus that ran infrequently and added an disproportionate amount of time to your daily 'grind', how is it fair to charge that same group extra for a service when they already pay a healthy chunk of the freight already for that service and you offer them no alternative.

I am not against the idea, and actually like the concept of sort of pay as you go travel using technology provided privacy concerns could be figured out, but if transit is not addressed prior to implementing this system, your plan has already failed. No transit means people will be forced to drive rather than suffer through unacceptable commuting times meaning that you have not encouraged more transit use nor got cars off the road. The ancilliary effects is you've added more expenses to people who in most cases ill afford them and will see a knock on effect through the local economy when there's less disposable income out there.

I know there are smart, intellegent ways out there that we can overhaul the way we go about moving around the region, but to put the initial burden on one cross section of the citizenry and tell them to lump it will ensure that we never see any forward movement on the issue.

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By race_to_the_bottom (anonymous) | Posted December 10, 2009 at 14:29:11

"If you start putting a cost burden on people " listen to the sense of entitlement. You're used to getting something for free that other people have to pay for, and now you cry foul at the idea that you might actually have to start paying for what you use instead of getting a free ride. Boo hoo.

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By Inhocmark (registered) | Posted December 10, 2009 at 15:52:40

My sense of entitlement? A free ride? Pardon me but my tax dollars at all levels of government along with everybody elses goes to fund those roads. To charge people again without providing a viable alternative is hardly a fair way to go about things.

And perhaps before commenting, read the entire post. I'm not against a toll, but you just can not unilaterally implement it without having some form or alterative public transportation in place otherwise you defeat the purpose of the whole project which is to lessen gridlock and get more people on public transportation. Without that aspect of the project it is just a (potentially) cynical naked tax grab.

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By race_to_the_bottom (anonymous) | Posted December 10, 2009 at 16:31:45

"Pardon me but my tax dollars at all levels of government along with everybody elses goes to fund those roads."

FTFA:

"In fact, Transport Canada did a study [PDF link] in 2005, which found that the annual total financial costs of the road system in Canada are $16.5 to $25.8 billion, while annual revenues from fuel taxes and fees at the federal and provincial levels were only $12.8 billion, i.e. a shortfall of between $3.7 and $13 billion per year.

"The Transport Canada study then tried to include every conceivable source of revenue associated with roads and motorists: traffic fines, lot levies (development charges imposed by municipalities), special assessments, parking charges, building prices (share of road revenues embedded in building prices) and find total road revenues of between $15.1 and $17.2 billion.

"Thus, even taking into account revenue sources, such as parking charges and traffic fines, that shouldn't really be thought of as user fees for roads, there is still an annual shortfall of between $1.4 and $8.6 billion per year.

"Far from motorists 'subsidizing the entire government' as many people think, motorists are being subsidized from general tax revenue to the tune of billions of dollars per year!"

You're welcome.

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By Jonathan Dalton (registered) | Posted December 10, 2009 at 16:40:32

That's assuming everyone now on the road needs to be there. Not everyone does. Some of the traffic would simply disappear as road users switch to GO Transit, alter travel times or make less trips. If you absolutely must drive, road tolls will reduce your travel time.

Road tolls are not a tax grab - they are a means of recovering the cost of building and maintaining infrastructure - and a reality in many places.

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By Hamilton needs a subway system (anonymous) | Posted December 10, 2009 at 19:48:34

Start tolling roads and then send the money to Hamilton to build a subway system from Eastgate Mall to Mac.

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By arienc (registered) | Posted December 10, 2009 at 20:31:35

Race to the bottom...FYI...here's a new PDF link to the Transport Canada study...the old one appears to be broken.

http://www.tc.gc.ca/policy/report/aca/fu...

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By kevlahan (registered) | Posted December 11, 2009 at 12:00:23

Ryan, could you please replace the link in my previous article with the one forwarded by arienc.

Thanks.

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By Ted Mitchell (registered) | Posted December 11, 2009 at 14:38:20

I do not believe that road transportation should be in the realm of services where costs are borne by taxes relative to income (income and residential taxes). That's great for health care and schools and libraries where there is a clear net societal benefit, and I'm happy to pay my share and more.

But not for roads.

Ryan's all-you-can-eat buffet analogy is apt, except it is not for free. We pay for it, like communists, relative to our incomes, not our consumption.

I'll rephrase the analogy, recalling we're really talking about miles traveled here, not food.

So if you pay $5 for a sandwich, or $30 for a big meal it works for you. The problem is that when you pay $50 for a sandwich (like I do), it doesn't sit well. Especially when many others pay $3 for gorging themselves on multiple helpings such that others can't wait long enough to get the sandwich they've already paid for.

I'm happy to pay for a sandwich for those who can't afford to eat, i.e. subsidize public transit.

But I resent the gorgers, i.e. the SOV commuters, vanity truck drivers, and lazy bums who drive 2 km to work, often recklessly, for cheap on roads I'm heavily subsidizing. These gluttons need to cough up for their fair share, which is why we need more gas tax and tolls.

Our society is stronger when we help each other to be educated and healthy and free from want.

It is weaker when we facilitate each other to be gluttonous pricks in the name of freedom, i.e. endangering anyone smaller than you on the road, and everything that breathes.

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By Ted Mitchell (registered) | Posted December 12, 2009 at 16:53:33

Thanks Ryan for the clarification.

The current arrangement of roads funded through fixed taxes creates a situation where in order to get value for money you must use it as much as possible (with predictable negative results as in tragedy of the commons)

And an apology to Marx; our road funding arrangement takes the worst parts of communism and capitalism and copulates them, i.e. from each according to his ability, to each according to his entitlement. I object to both sentiments.

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