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2011 Study Examines True Cost Of Toll Roads
Federally funded study from 2011 finds toll roads are 33 times less efficient than the gas tax as a road funding mechanism.

Toll road
Transportation officials worldwide have embraced toll roads, cordon pricing and other forms of per-mile taxation as if they were the solution to funding difficulties. In a federally funded 2011 study, the Transportation Research Board's National Cooperative Highway Research Program concluded that the gasoline tax remains by any measure the most efficient highway funding mechanism.

The researchers gathered data on the true cost of administering each system, including collection and compliance costs accumulated by government agencies and private contractors. Fuel taxes were scrutinized with data from eight US states. Data on the vehicle miles traveled (VMT) tax were taken from the pilot project underway in the Netherlands. Fourteen US toll roads, old and new, were examined from 2003 to 2007. The four congestion tax schemes studied were located in London, England; Milan, Italy; Oslo, Norway and Stockholm, Sweden. A parking tax program was also examined in Westminster, England.

"The fuel tax system is the most cost-effective revenue system among those examined in this report and has the lowest operating cost for all unit measurements," the report concluded. "The operating cost for fuel taxes is only approximately one percent of tax revenue and averaged approximately $1.20 per vehicle to operate and manage."

Tolling, by contrast, introduces an extraordinary amount of overhead to the cost of operating a road. Instead of needing only construction and maintenance crews, toll roads require the hiring of customer service agents to process credit cards, a legal department to handle disputes, a separate maintenance crew to keep the electronic transponder readers in working order, a marketing department to encourage people to use the for-profit road, and even more management personnel to keep track of all the new functions.

"Although it might cost only $0.54 per transaction to operate and maintain the tolling systems, tolling agencies spent 33.5 percent of revenues for toll collection, administration, and enforcement activities in 2007," the report found.

A 2008 analysis by TheNewspaper found that the most modern toll roads -- the ones using only electronic toll collection systems -- still imposed an average overhead cost of 22 percent (view analysis). As the gas tax mechanism raised $37 billion in 2007 with an efficiency of 99.08 percent, America would lose $12 billion by switching to a less efficient toll funding mechanism.

The NCHRP report found per-mile tax systems slightly more efficient, costing 6.6 percent of revenue in the Netherlands. Researchers found a host of privacy problems in each of the potential technologies that could be used to implement a VMT system in the United States. Several options included the use of dedicated short-range communication and GPS devices that would track vehicles for the purpose of taxation. The report found VMT systems introduced a number of complex problems.

"A system like Oregon's, which charges by the mile in-state but has no charge for out-of-state mileage, could induce a driver to make a long trip along the Washington side of the border with that state," the researchers wrote. "This would reduce the amount of mileage fee owed to Oregon without affecting the gas tax rebate. Evasion is a larger problem. With a GPS-based system, this might be accomplished by blocking the antenna to prevent signal acquisition."

London's congestion tax imposed a 55.4 percent overhead costs without decreasing traffic levels within the congestion zone. Traffic just outside the zone increased by 4 percent.

A copy of the NCHRP report is available in a 6.6mb PDF file at the source link below.

Source: PDF File Costs of Alternative Revenue-Generation Systems (Transportation Research Board, 6/1/2016)

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