Tuesday, October 27, 2009

Tolls

I think too often discussion of road tolling gets a bit confused. There are two reasons to toll roads. One is toll as user fee, which can be just taken care of with a gas tax except for roads that for whatever reason we've deemed special. The other is as a way of reducing congestion, and the point here is that there's a congestion externality and you can turn "too much time wasted in traffic" into "money for other stuff" and make everyone better off.

There's also no reason for a flat-rate vehicle miles tax, which can be handled more smartly with a gas tax (I don't know why people think a whole new exciting tax is more politically easy than just nudging up the gas tax.) As for a high tech continuously varying by time/place/congestion VMT tax... well, it's a transport economist's dream, perhaps, but people would hate it. A lot.