Michigan has been tangled up in a transportation funding back-and-forth for the last year or so. The most recent episode was a May ballot initiative to raise sales and gas taxes that failed 80-20. As of yesterday, news...
- The Tax Policy Blog
- Study: Toll Collection Cheaper Than Conventionally Thought
Study: Toll Collection Cheaper Than Conventionally Thought
A new study by the Reason Foundation (PDF) finds that toll collection costs are much lower than conventionally thought:
Conventional wisdom says that fuel taxes are the most efficient way to pay for highway use, costing only 1% of the revenue collected to administer. By contrast, conventional wisdom says collecting tolls eats up 20 to 30% of the revenue collected. But a new study from the Reason Foundation says both of those beliefs are wrong. The real cost of collecting revenue via fuel taxes is actually about 5%, and 21st-century all-electronic tolling (AET) can cost as little as 5% of the revenue collected.
I'm from San Diego County, where a stretch of I-15 has electronic toll collection. Carpools and buses use the lanes for free, but solo drivers pay a toll based on how congested the parallel freeway is. Everything is done electronically by transponders (and license plate photographing for those without the transponder) - no tollbooths, no searching for change, and you don't even have to slow down to pay it.
The word "turnpike" on many old roads serves as a reminder that tolling was the main funding source for roads and bridges for decades. The federal gasoline tax emerged during the Great Depression primarily as a tax source for general government, but over time became linked to transportation spending. For building the Interstate System starting in the 1950s, the gas tax won out over tolls because of cheaper collection costs and because bonded borrowing would be unnecessary. But as transportation costs rise ever higher, cars get better mileage, and inflation erodes the purchasing power of per-gallon gasoline tax revenues, perhaps it's time to look at tolls once more.
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