TOLLS, NOT TAXES
March 12, 2009
With mounting opposition to British Columbia's unpopular carbon tax and a provincial election looming, the government felt it had to do something for voters who use the Coquihalla, a toll highway running through the province's interior; they eliminated the toll. Unfortunately, its removal had little to do with sound infrastructure financing, says the Fraser Institute.
A better way to increase fairness and finance transportation infrastructure is to increase the use of tolls and to offset them with reductions in taxes. The question, says Fraser, is how?
Fraser suggests that tolls administered by private entities are superior to tax-based approaches for several reasons:
- First, tax-based funding of transportation is inequitable: taxes take money from people who may not drive, or never use certain roads, and subsidize other people who do.
- Variable toll pricing is the key to using road capacity more efficiently and preventing stop-and-go driving; rates increase when roads are heavily congested and decrease when they are not.
- In the past, toll collection was cumbersome, expensive and a nuisance to drivers, but technological innovations have made variable toll collection easier; drivers no longer need to stop to pay as modern electronic toll collection systems allow payments to be made without toll booths.
- Vehicles are now outfitted with wireless radio frequency transponders, which are read by overhead antennas that detect and bill drivers according to use.
- Finally, a major advantage of tolls over taxes is that tolls present an opportunity to upgrade and expand transportation infrastructure at minimal cost to taxpayers.
There is no doubt that removing tolls on the Coquihalla will provide relief for many users who have been double-charged for over two decades. However, a more effective way to finance transportation is to have more tolls and lower taxes. Unfortunately, the BC government's decision to remove tolls on the Coquihalla was based on politics rather than sound policy, says Fraser.
Source: Niels Veldhuis and Charles Lammam, "Tolls, Not Taxes," Fraser Forum, February 2009.
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