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Study: Toll Collection Cheaper Than Conventionally Thought

1 min readBy: Joseph Bishop-Henchman

A new study by the Reason Foundation (PDF) finds that toll collection costs are much lower than conventionally thought:

Conventional wisdom says that fuel taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. es 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 taxA gas tax is commonly used to describe the variety of taxes levied on gasoline at both the federal and state levels, to provide funds for highway repair and maintenance, as well as for other government infrastructure projects. These taxes are levied in a few ways, including per-gallon excise taxes, excise taxes imposed on wholesalers, and general sales taxes that apply to the purchase of gasoline. 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 inflationInflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a “hidden tax,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spending power. erodes the purchasing power of per-gallon gasoline tax revenues, perhaps it's time to look at tolls once more.