The Benefits and Costs of Tolling

The costs of collecting electronic tolls are rapidly declining, particularly for roads that only accept electronic tolls. In 2009, when I was writing Gridlock, the best available estimates indicated that 12 to 23 percent of toll revenues went to collection costs, compared with just 3 percent for state gas taxes.

However, a recent paper from the Reason Foundation claims that the costs of collecting electronic tolls has now fallen to be almost as low as the costs of state gas tax collections. Moreover, once the benefits of using tolls to relieve traffic congestion are considered, tolls become a far less costly way to pay for roads.

Those traffic congestion benefits are the reason why the Antiplanner recently proposed that highways be refinanced out of tolls in the form of vehicle-mile fees rather than gas taxes. Congestion imposes a $100 billion-plus annual cost on Americans; we know how to fix it, and the only thing preventing that solution is inertia.

Some of the main opponents of VMT pricing are conservatives who fear that it will invade people’s privacy or “double tax” roads. But the Antiplanner’s proposal is to eliminate the gas tax, thus eliminating any fear of double taxation. Meanwhile, every experiment done with vehicle-mile pricing has carefully preserved individual privacy–devices used to track road charges haven’t kept track of where or when people traveled, only of the amounts they spend. Conservatives should worry more about insuring that fees collected from highway users are spent on the roads they use, not on frivolous streetcars and light-rail projects.

Even Oregon Representative Earl Blumenauer–who rarely agrees with the Antiplanner on any land-use or transportation issue–supports VMT pricing. So maybe this important change in transportation pricing has a chance to take place soon.

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4 thoughts on “The Benefits and Costs of Tolling

  1. bennett

    “…congestion… we know how to fix it…”

    Really? I’m going to need you to elaborate because nothing you posted today convinced me that tolling will solve the congestion problem. Rush hour is rush hour. People get to work at 8 and leave at 5. How will tolls change this?

  2. Frank

    People get to work at 8 and leave at 5″

    Maybe half do. I certainly don’t. 6-3 for me. Factor in that the labor participation rate is the lowest in 30 years. Also don’t forget that telecommuting accounts for 11 percent of the workforce. This is all somewhat irrelevant because as others have pointed out, most trips are not commuting trips.

    Anywho. Walter Block wrote about the effects of congestion pricing long ago. This is nothing new and readily available to anyone with curiosity enough to use ask the Oracle and patient enough to do the reading.

  3. bennett

    I know congestion pricing has been used in Western Europe. Has it been successful? In particular, has the congestion pricing simply shifted the load to other roads and arterials? In Central Texas we have a bunch of new toll roads which are all free and clear on congestion. However, the traffic burden on intersecting roads has been increased significantly, and the toll roads have not resulted in the reduction of congestion on I-35 and mopac as promised.

  4. FrancisKing

    Congestion pricing in Europe has been a success. It has been applied as a congestion ring around an urban area. This then leads to much lower car flows. The experience of London is that the car flows tend to creep back after a while – I guess the less busy roads start to look attractive.

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