Ahead of the Senate hearing on “Offshore Profit Shifting and the U.S. Tax Code,” I released a report reminding us that contrary to the perception created by these types of political spectacles, corporations pay a...
- 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.
Buy this blogger a cup of coffee!
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official weblog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.