Tolls More Equitable Than Sales Tax For Funding Freeways

You’ve heard the buzz about “Lexus Lanes,” a new trend where tolls are adjusted in order to keep some freeway lanes flowing smoothly. They’re related to the idea of charging higher prices for parking, or even a congestion charge such as the one considered for New York City. It’s widely thought the lanes are unfair, since they allow wealthy drivers to zip past congestion. There’s only one problem with that view: a new study disproved it, arguing instead toll lanes are more just than the usual method for funding highways, sales taxes.

Two California professors considered the issue in a new article titled, “Just Pricing: The Distributional Effects of Congestion Pricing and Sales Taxes.” The study found that the lanes were disproportionately used by middle and upper-middle income people, and that the tolls were regressive. So what’s the rub? It turns out the usual means for paying for transportation infrastructure, such as sales and gas taxes, are even more regressive than tolls. In fact, the study concludes that:

… if [sales tax] funds had been used to finance the express lanes, the study found, the poor and wealthy would have paid more. Middle- and upper-middle-income taxpayers would have paid $26 million less each year than they paid under the current cost-distribution system, and the very poorest residents would have paid over $3 million more than they actually did under the current toll system.

They conclude that “Using sales taxes to fund roadways creates substantial savings to drivers by shifting some of the costs of driving from drivers to consumers at large, and in the process disproportionately favors the more affluent at the expense of the impoverished.” The authors propose two policies to overcome the remaining regressive character of tolls: giving out free travel credits to low income commuters, or using the funds to invest in public transit. The comparison is between tolls and general sales taxes, not gas taxes, but I suspect gas taxes would have been only slightly less regressive than sales taxes. (Because the poor own fewer cars and drive less)

Previously I also suggested we should consider other benefits of congestion pricing in the equation – greater transportation choice for all (including low-income commuters), less pollution, and perhaps a shift in behavior towards transit, carpooling, or other more efficient modes. I also discussed before some of the implications for another form of congestion pricing — raising parking meter rates.

What most frustrates me with congestion pricing critics is not their concern — not enough research has been done on equity, and it is a valid point to discuss — but how misplaced it seems given our skewed policies. Our society is riddled with deeply regressive policies. Sales taxes, gas taxes, and lotteries are all known to be regressive. We spend more than twice as much money subsidizing housing for the rich than we do for the poor. The poor disproportionately live near sources of pollution, and consequently have higher rates of asthma, heart disease, and other diseases caused by environmental factors. Meanwhile, our public transit systems, critical lifelines to opportunity for the very poor, are crumbling. In that light, adopting less-regressive congestion pricing and spending some of the revenue on transit service seems like a good decision.

> UCLA: “Joint UCLA–USC study shows that toll roads are more fair than taxes”
> LATimes Blog: “Study finds congestion pricing doesn’t hurt the poor”

We Need Congestion Pricing

Maybe it was during a 20-minute, 2-mile taxi ride from Georgetown to downtown D.C., where my average speed was 6 miles per hour. Or maybe it was during a lurching bus ride across K Street that took perhaps half an hour to traverse the same distance. During both trips, city street were jammed with large, single-occupancy vehicles, while buses, delivery trucks, and business vehicles were slowed to a crawl.

Washington, D.C. needs to get serious about downtown congestion. London congestion pricing has been a smashing success, with the Times reporting today on an unexpected benefit: drastically reduced parking costs downtown. Not the mention the significant revenue for public transportation investment. Now officials in Manchester are contemplating a two-ring system that would charge motorists £1-3 to enter the city, depending on the time of day and location. While business types are skeptical (as they usually are) the only evidence they can marshal are opinion polls. That takes us to Paris, a city that has cut auto use by 20 percent in seven years — without London-style congestion pricing. When parking spaces were converted to a dedicated bus route, the residents of the Left Bank neighborhood of Montparnasse held a funeral, predicting the death of the neighborhood. Now the owner of a famous cafe admits “We’ve come to love it,” noting the bus brings workers and customers with improved efficiency. Elsewhere in the city, programs initiated by mayor Bertrand Delanoë are raising the cost of parking, creating dedicated bus and bicycle lanes, making tens of thousands of bikes available for rent, and “civilizing” the city’s most car-friendly streets by cutting lanes and expanding pedestrian space.

D.C.’s attempts are meager in comparison. Increased parking meter prices are only in effect in several neighborhoods. The tiny and highly-hyped bike sharing program still hasn’t launched despite media reports it would start in May. The networking of bicycle lanes and trails is fragmented and far shorter than other U.S. cities. DDOT’s experimental bus and bicycle lane on 9th Street downtown is too short and poorly marked and enforced to make much of a difference.

The solutions to congestion are at hand, all that’s lacking is the resources and political will to do them.

Obama: Congestion Pricing ‘Thoughtful’ and ‘Innovative’

In an exclusive interview with a New York television station, Senator Barack Obama described congestion pricing as a thoughtful and innovative approach to the problem of congestion. In the interview he described it as a way to reduce congestion, reduce pollution, and invest in infrastructure and mass transit. With an April 7th deadline approaching, New York City appears poised to approve a historic congestion pricing plan. (See Streetsblog for exhaustive congestion pricing coverage.)

> WNYC: “Obama Urges Oversite of Financial Markets, Supports Congestion Pricing“