Study shows toll roads are more fair than taxes

(PhysOrg.com) -- Popular wisdom may suggest that toll roads are unfair to the poor, but a new joint study by UCLA and USC researchers shows that these pay-as-you-go transportation options may actually be fairer to all income levels than paying for road improvements through sales taxes.

"Just Pricing: The Distributional Effects of Congestion Pricing and Sales Taxes," examines the high-occupancy toll lanes on State Route 91 in Orange County, Calif., known as the 91 Express Lanes. The study is currently available in the online edition of the journal Transportation and comes "at a time when public officials in Los Angeles and other cities are considering congestion tolls and sales tax increases for transportation," according to study co-author Brain D. Taylor.

In the study, Taylor, professor and chair of urban planning at UCLA and director of the UCLA Institute of Transportation Studies, and co-author Lisa Schweitzer, assistant professor at USC's School of Policy, Planning, and Development, compared how two distinct transportation-funding mechanisms — a toll road and a tax measure — affect Orange County's lower-income residents.

Because many voters and elected officials oppose proposals for "congestion tolls" on equity grounds, road projects are usually funded by more politically acceptable sales taxes. The researchers found that this reasoning is flawed.

"Asking drivers to pay for road use ignites debates over fairness, but the debate often fails to address the larger question of how funding for transportation projects is actually being distributed throughout the community," Schweitzer said. "Freeways are a premium transport service, and they should be priced accordingly. The study shows that if we are prudent, we can do that while being sensitive to the circumstances of low-income drivers."

The 91 Express Lanes is a 10-mile stretch of roadway comprising four lanes in the center of the freeway reserved for registered users with transponders. Subscribers can choose to pay a toll to enter these lanes and bypass stop-and-go traffic in the adjacent "free" lanes. The tolls are set to keep traffic in the reserved lanes free-flowing and range from $1.25 to $10, depending on the direction and time of day.

The study found that the express lanes are disproportionately used by middle- and upper-middle-income households. Using this as a starting point, the researchers asked hypothetically how people of different income levels would be affected if the four express lanes had instead been financed with sales tax revenues.

To answer this question, they looked at Orange County's local option transportation sales tax, known as Measure M, which is levied on everyone who purchases taxable goods and services in the county. Measure M generated about $240 million annually during the period of the study, which considered expenditures by both Orange County residents and out-of-town visitors.

If Measure M 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.

Under the current 91 Express Lanes scenario, those who are paying the most to use the lanes are typically middle- and upper-middle-class households who have the freedom to decide whether the extra price is worth the savings in time.

"While regular users can pay dearly for the right to bypass 9 miles of bumper-to-bumper traffic — about $700 a year for heavy users and $300 a year for moderate users — all such payments are voluntary, because traveling in the congested free lanes is always an option," Taylor said.

The study notes that most forms of transportation finance — fuel taxes, sales taxes and tolls — are regressive forms of taxation in that they burden the poor more than the rich.

"Are tolls regressive? According to this and many previous analyses, yes. But for transport policy, whether tolls are regressive fails to fully address the justice and fairness issues that arise in financing road use," the researchers write. "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 researchers suggest that if policymakers are worried about low-income, peak-period commuters paying tolls, one way to address this would be to provide discounted "lifeline" pricing based on income levels, as is done by utility companies for qualifying customers, or provide travel credits to lower-income commuters. Another strategy is to use toll revenues to enhance transit services along the corridor so that people have an alternative to driving on the freeway.

While economists have long argued for "congestion tolls" on efficiency grounds, this groundbreaking new study suggests that such tolls may, surprisingly, increase equity in comparison to raising sales taxes to pay for transportation facilities.

The study is currently available online at www.springerlink.com/content/l168327363227298 .

Provided by UCLA


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Aug 20, 2008
Why bother studying freeways? The future is in mass transit, not individuals taking a ton of steel to and from work everyday.

Aug 20, 2008
The economy of the United States was built, in part, on a well built interstate transportation system.
Does this study even touch on the value that the roads of America provide to commerce?

Aug 21, 2008
all such payments are voluntary, because traveling in the congested free lanes is always an option," Taylor said.

They're only voluntary IF YOU CAN MAKE THEM. Else going around the toll road is the only option. Which makes them manifestly unfair to the poor ... without treatise-length argumentation.

On top of which, toll roads are a PITA. You either need to stop to pay or pay for more surveillance.

Those who are able to use the infrastructure to make a very comfortable living should recognize that option is not available to all. An income tax is an equitable, less PITA solution.

Aug 21, 2008
We don't have this kind of toll road in the UK yet. But if it were to replace some tax with a volutary toll, surely that's a good thing? This means the rich pay more and the poor pay less.. I'd rather that even if I have to sit in traffic.

Aug 21, 2008
I don't have a problem with toll highways IF they aren't ran by private corporations. If you take a look at several private toll roads, you will find most private toll roads come with a %u201Cnon-compete clause%u201D. The toll operators must be guaranteed a certain amount of funds to meet costs. To achieve this,traffic is diverted to the toll road by making alternate routes absolute headaches. This is done by adding extra stoplights, changing traffic patterns, etc.

see here:
Chicago - http://www.carand...d_column
http://www.carand...s_column

As far as I'm concerned, this breaks any amount of "fairness" on the issue of private toll roads.

Aug 21, 2008
Oh for fucks sake... no shit sales tax is unfair. EVERYONE who knows ANYTHING about it knows that sales taxes are regressive and total bullshit. the only "fair" tax is an income tax. which is what we need on corporations in this country, flat 20% tax on corporate profits. no deductions. no wiggle-room of any kind, you tell wall street you made 100 millions dollars, you pay 20 million in taxes. period. no accountant/tax experts needed. audits are easy as hell.


I had to respond to this message because you sir are wrong. There is a way for small family corporations to not have to pay taxes on the corporations. However, for big corporations like a factory the tax rate is the highest in the entire world at 35%. And people wonder why our jobs our being sent to China. Hmm maybe their corporate tax rate is half ours?

Aug 21, 2008
No study in the world will ever convince any of us that toll roads are a good idea. Roads are public infrastructure, and must be in the public trust, paid for from public money.

The whole reason behind the Interstate system was NATIONAL SECURITY - to ensure good roads to move troops, supplies, and lastly, civilian populations, around in time of emergency or war. They were sold to the public by the less-scary idea of increased commerce, which is their function only when not needed in emergencies.

FREE HIGHWAYS are necessary to our national security! I would love to see a tank needing to go somewhere, only to have to knock over a toll booth first! And what if we are at odds with a country that owns our strategic roads? They could destroy the road and break our vital infrastructure to defend ourselves, or they could potentially establish those zones (many of which are 10 miles wide in effect) as actual bases within our sovereign territory - people live and work in those zones, and were IGNORED when these deals were made!

While this might not be the most likely scenario, it carries consequences so potentially severe - and occurring at a critical time - that it astonishes me that those in power would even consider this option...and makes me very suspicious of the reasons why they would even consider it.

We pay huge taxes already to support the road system here in Texas, taxes that are buried in everything, so they are impossible to calculate accurately, but probably are close to $1000 per year per driver. TxDOT (Texas Department of Transportation) has recently come under scrutiny for mismanagement and possibly corruption and illegal use of public funds while our roads, once the nicest in the US, are crumbling.

This is the same TxDOT that forced toll roads down our throats and added insult to injury by selling them to a Spanish company. Now they are converting highways paid for by taxes and already built into toll roads. Two of the affected roadways in the Austin area primarily serve poorer neighborhoods...and *will* cut them off because the road infrastructure here is an embarrassing example of letting real estate developers do the platting without overall planning or supervision, and the public transportation system is so bad that many people cannot make it to work on time no matter how early they leave in the morning...in other cases, it changes an 11-hour effective work day into 14 due to increased transit time...people with children can't deal with that! Tell me that such a consequence is not an unfair burden on the poor!

NO to ivory-tower academics pushing agendas! NO to foreign ownership of sovereign infrastructure! NO to politicians who sell us out! NO to toll roads! (And NO to PhysOrg.com toadying to the special interests!)

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