Mary Peters: The Folly of Higher Gas Taxes

Today's (Saturday, August 25) Washington Post included an op-ed by US Dept. of Transportation Secretary Mary Peters (who was just mentioned for other reasons on this blog the other day).  Her key point is that raising gas taxes to improve transportation infrastructure (which has been raised in the public's consciousness since the bridge collapse in Minnesota) is the wrong strategy.  She cites a couple of reasons:

1)  Because the money is deposited into a federal trust fund, its allocation becomes politicized, and Congress is apt to skew the priorities for its use.  I would tend to agree with this point.

2)  It does little or nothing to reduce traffic congestion, because it does not dissuade people from driving during congested times or on congested roadways.  I partially agree.  Large gas taxes would push people towards smaller cars and also get them to think about using them less, but it wouldn't necessarily affect congestion.  Small increases in the gas tax would probably make little difference.

I am in favor of raising gas prices, but for different reasons and in a different way.  Burning gasoline creates environmental damage.  Gas taxes could be used more appropriately to offset the damage caused by their use by being used for environmental protection.  A better strategy in my mind is that gas taxes could replace wage taxes.  The taxes collected would be used to reduce wage taxes.  This works well for progressivity of tax policy, because rich tend to buy more gas and poor pay more in wage taxes.

Her key point is that we currently provide virtually all of our roadways for free.  Any free good will tend to be overutilized.  The infrastructure itself should be priced rather than the gas.  I completely agree with this point.  If people and businesses were charged for the use of the roads--more during congested times; possibly more for larger, more damaging vehicles--then they would start to make decisions based on their use.  That's the idea behind congestion pricing (another recent blog): charge people for their use.  If we tolled every road then a lot more people would choose to take the train or bus or ride their bike or otherwise think a bit harder before hopping in their car and driving.
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Steve Offutt, Arlington resident and Director - Arlington Initiative to Reduce Emissions (AIRE), Transportation Projects

Comments

[Daniel Nairn]

The Swiss have been tolling trucks with use of on-board GPS monitors for a few years now.

I know this may trigger some privacy concerns here in the States, but it's interesting to think about the possibilities. The calculations could adjust for location, time of day, and type of vehicle. It could ensure that the payment would fit the use more precisely.

[Commuter182]

I support small increases in the gas tax and having toll on some roads & bridges to help pay for road improvements and maintenance. Don't want repeats of that bridge collapse in MN. However, some points from the article I disagree with:

"A better strategy in my mind is that gas taxes could replace wage taxes.
The taxes collected would be used to reduce wage taxes.
This works well for progressivity of tax policy,
because rich tend to buy more gas and poor pay more in wage taxes."

No, I don't think so. Gas taxes are not more progressive than income taxes because a gallon of gas is sold at the same price for everyone, regardless of income. If that price goes up from additional gas taxes, it's the low(er)-income drivers who get forced off the roads. Many of the working poor qualify for Earned Income Credit, so their wage taxes are partially offset by this, but there's nothing to offset a higher gas tax, other than being FORCED to not drive.

"The infrastructure itself should be priced rather than the gas...If people and businesses were charged for the use of the roads--more during congested times; possibly more for larger, more damaging vehicles--then they would start to make decisions based on their use. That's the idea behind congestion pricing...charge people for their use."

Everyone here does realize we are all paying for roads, it's just a question of directly or indirectly? Supposedly, we have "free" public education, but it's simply subsidized government schools. Apparently, universal access to elementary & secondary education is considered important, hence there is no usage fee charged. Even people with no children have to subsidize education with their local taxes.
Likewise, universal access to roads, travel, and mobility is also important, and hence entry and usage fees should generally remain low.

As for charging people more during times of congestion--to some degree, that's similar to "blaming the victim". People drive during the congested "rush hour" because they have to, as their working hours are set by their bosses, not because they like to. If you are such fans of imposing onerous government taxes and regulations on people, why not compel employers to allow more teleworking or set working hours outside of the usual 9 to 5? Less need for a "rush hour" automatically = less congestion.

[Fritz]

The Economist "Free Exchange" blog posted a rebuttal against a similar argument from the Cato Institute.

http://www.economist.com/blogs/freeexchange/2007/08/emissions_and_omissions.cfm

[Allen Muchnick]

I have far more trust in our elected Congress to allocate transportation funds wisely and fairly than I do in the multinational corporations that are now starting to get free reign over our public freeways by VDOT and other state DOTs. While congestion pricing highways is a great idea, it isn't feasible for most roads, just limited-access highways, bridges, and tunnels.

[TheGreenMiles]

Her editorial was classic Bush appointee nonsense. Loyalty to the boss trumps expertise and refusing to raise taxes trumps getting anything done.