Pro/Con: Should states use tolls rather than gas taxes to pay for interstates?
Yes: Tolls are less regressive than gas taxes
The United States faces a transportation infrastructure dilemma. According to recent estimates from the Reason Foundation, reconstruction and needed capacity enhancements to the Interstate Highway System will cost approximately $1 trillion over the next two decades. If no new lanes are added, reconstruction will still cost nearly $600 billion.
The Obama administration, to its credit, has proposed partially addressing this funding shortfall by allowing states to collect tolls on their Interstate segments for reconstruction purposes.A number of states are interested in expanding tolling, particularly in the congested urban corridors that could benefit the most from variable road pricing and the resulting capacity enhancements.Unfortunately, the federal government currently prohibits states from tolling their own interstate segments, meaning states often face a choice between large tax increases or crumbling, congested highways. It’s time Congress gave states a better choice.Many economists and fiscal conservatives have long favored tolling. And two recent independent polls from the Associated Press and engineering firm HNTB indicate that the public prefers tolling over fuel tax increases.However, opposition from the trucking industry has prevented the expansion of turnpikes. As technology and best practices have improved, the excuses given by tolling opponents are now completely disconnected from our current reality.For the past several years, the federal government has been bailing out the Highway Trust Fund with tens of billions of dollars in general revenue funds. Federal fuel excise taxes have remained the same since 1993. Since then, inflation has eroded about half of the fund’s buying power.Some states have responded by raising their fuel taxes. This may buy them some additional time to implement new practices and technologies, but does so in a way that is highly regressive and inefficient relative to the alternatives.More fuel-efficient vehicles mandated by federal law will further strain the system and perversely shift much of the fuel tax burden to the working poor, who tend to drive older, less fuel-efficient vehicles.The trucking industry, which is responsible for the majority of pavement damage, escapes much of this burden through poorly structured tax regimes.The industry, along with the AFL-CIO and U.S. Chamber of Commerce, now vocally supports federal fuel tax increases. While such tax hikes are unlikely to gain much political support, advocating for them diverts attention from the trucking industry’s large road subsidies that pricing could reduce.Congress should end its interstate tolling ban and allow the50 laboratories of democracy the freedom to test new technologies and practices. Clinging to an increasingly perilous status quo is no longer an option.
Marc Scribner is a fellow at the Competitive Enterprise Institute (www.ceii.org). Readers may write him at CEI, 1899 L St. NW, 12th floor, Washington, DC 20636.