The case for road tolls

Item date: 
February 5, 2013
Item context: 

A second rational response to Rex Murphy's ridiculous rant, this time by a McGill University economist.

By WILLIAM WATSON

... I hazard disagreement with Murphy’s column in the National Post last weekend... Strangely, Murphy’s first stated reason for opposing tolls is that most Canadian big-city downtowns are clogged with traffic, so that toll-takers — “bill collectors in kiosques” — could only slow things down even further.

But too much traffic is exactly the problem tolls would solve... If you’re an economist stuck in traffic, you spend the dead time reflecting on how downtown space at rush hour is a scarce resource: Many more people want to occupy it than can. Why? Because its price is zero. As the ads say, it’s a “free gift.” (What gift isn’t free?) It’s being given away — for nothing — to anyone who wants it.

To use an analogy that should resonate in Newfoundland, when there was too-free access to the cod fishery, the cod’s annihilation ensued. For the good of the scarce resource, access to it had to be rationed. As we finally did with the cod, though for most of them posthumously, we could license rush-hour space downtown or on our big-city bridges. There could be  random draws from regional telephone books and then people who didn’t need their “quota” could sell it on eBay to people who did. But wouldn’t
it be easier just to charge people directly for their use of downtown at peak times?

Only a few years ago it wouldn’t have been. Charging road users would have been as cumbersome and congestion-increasing as Murphy suggests. But we do now have the technology to do it more or less seamlessly. If there isn’t already “an
app for that,” there could be next week.

Tolls would serve the crucial economic function of rationing access to a scarce resource, reducing demand for it and making sure those who did use it were getting ample value out of it, as their willingness to pay the toll would suggest they must be. Unfortunately, half a lifetime of teaching economics has convinced me most people care not a whit about “efficiency arguments” of this sort.

What they really, truly care about, often ferociously, is fairness. Among the anti-toll voters in the Montreal Internet poll I suspect there were many off-island commuters who don’t now pay tolls but under the proposed changes would have to start doing so. Not surprisingly, they believe a new tax on them, which is how they see the tolls, is simply not fair.

But surely they’re wrong. What could be fairer than having users pay for whatever services they consume? You use the new bridge? Well, then, you’re the person getting the benefit out of the bridge. Why should the rest of us pay just so you can abuse scarce resources without charge?

Bridges aren’t health care. Medicare may be a sacred trust. Getting across a bridge without the inconvenience of paying for it isn’t. Lots of people say free health care defines Canada. I’ve never heard anyone say free bridges and roads do.

You might argue that even if I never cross the bridge myself I benefit from it because FedEx and others deliver goods to me using it. Fair enough. Let businesses build the cost of the tolls they pay into their services, as they will, and then I’ll end up paying my fair share, as I should.

Or you might argue, as Murphy does, that poor people will be hurt, for instance, “the short-order cook coming in from the suburbs to earn his minimum wage flipping burgers.” Really? How many such people can there be? And are they typical of road-
and bridge-users? Do most minimum-wage workers even own cars? Regard for the poor certainly is a proper concern of government. But outlawing road tolls is among the most haphazard anti-poverty programs imaginable.

As for the argument that drivers are already over-taxed, well, who isn’t over-taxed? But if more roads and bridges are financed by user charges, there will be less justification for high gas taxes. Realpolitik may teach that a tax, once raised, never falls — except that’s exactly what happened to federal income tax rates over the last 20 years..

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