NCPA - National Center for Policy Analysis

TOLLS, NOT TAXES

December 14, 2004

Using highway tolls, not taxes, is the most efficient way to fund transportation infrastructure, writes Ken Green and Niels Veldhuis of the Fraser Institute.

Government provision and maintenance of roads and other projects, they argue, suffer from a number of disadvantages when compared to private markets.

  • Lack of fairness: taxes take money from people who never use certain roads while subsidizing others such as trucking firms, who impose the most wear on the highways they travel.
  • Lack of incentives: government transportation agencies have no incentives to complete projects on time or on-budget.
  • Environmental impact: fuel taxes are arbitrarily fixed and don't send a signal to motorists regarding the environmental or congestion impacts of their daily driving.

By contrast, tolls raise tax revenues from consumers based on the services they use -- a fairer, more environmentally friendly approach that also avoids wasteful governmental spending, say Green and Veldhuis.

 

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