Strange, but true:

North Carolina hopes to win permission this spring from the Federal Highway Administration to pay for the work on I-95 by collecting tolls from drivers who use it. Tolling and construction details are expected to change before the final plan is approved later this year. If federal permission for toll collection is denied, DOT planners would have to scrap their proposal. […]

Car and truck owners who buy N.C. Quick Pass transponders would pay the lowest toll rate. E-ZPass and Sun Pass transponders used on toll roads in other states also would work on I-95.

For vehicles without transponders, cameras would record the license numbers, and the owners would be billed by mail, at a higher toll rate.

Current plans call for toll collection to start on the full 182 miles of I-95 in 2019 – after the eight-lane widening is finished on 60 miles and before the six-lane widening starts on the remaining 122 miles.

Drivers on the eight-lane section would pay a rate expected in 2019 to be around 19.2 cents a mile. Drivers on the rest of I-95, with improvements scheduled farther in the future, would pay about 6.4 cents a mile.

That means a trip from North Carolina to Virginia would cost $19.20 for a two-axle vehicle. Larger trucks would pay higher rates.

Reasons to deny the request:

  1. A toll is a tax — taxes are bad, Q.E.D.
  2. A whiff of big brother — you're taking pics of my license plate?
  3. Equity — a toll is regressive, people who drive highways can't afford to fly, the rich should pay

Reasons to approve it:

  1. A user fee is the most efficient way to finance a public project

Three reasons vs only one! Denied.

Update (1:48 pm]: Some clarifications in the comments.

Posted in
  1. Flerg777 Avatar

    You only know its relative efficiency if you know the extent to which it is regressive.
    Also, a user fee (at the time of use) may be the easiest way to collect monies, but not necessarily the most efficient way to finance a public project, esp. when you can piggy-back it onto other tax collection (like income or sales), or get bonds at rates below inflation.

  2. John Whitehead Avatar

    Actually, I think a lump sum tax is the most efficient. But in this case, I’m thinking of the negative externalities as well. A toll set at the marginal social cost of driving will be the most efficient.

  3. Flerg777 Avatar

    What if the marginal social cost of driving is higher than the marginal social cost of a progressive tax on those who drive?

  4. John Whitehead Avatar

    Too much driving?

  5. Flerg777 Avatar

    Sorry, got it backwards. What if the former were lower than the latter?

  6. John Whitehead Avatar

    Too little driving!

  7. Flerg777 Avatar

    Cute, prof. Seriously, though, am I on the right track here? Isn’t it the case that one doesn’t really know if tolls are more efficient than progressive taxes when it comes to financing projects?
    I know efficiency isn’t the only reason you want a pay-as-you-go tax (for shame!), but is it a tad obfuscatory to imply that it is always more efficient, just to get in place a tax because it affects people’s actions in a way that you prefer? Okay, that last bit sounded too offensive; what I meant to say is that you are obviously a socialist.
    )
    Seriously though, once you figure out a way to mitigate the regressive impacts on tolls such that their collection doesn’t disproportionately impact poor folks & the money collected isn’t made markedly less valuable for its now sitting with billions of other dollars, I’ll fully support them. And you know how big a deal my support would mean for their passage into law.

Leave a Reply

Discover more from Environmental Economics

Subscribe now to keep reading and get access to the full archive.

Continue reading