My op-ed in today’s Sun:
Opinion: ‘Free’ streets, highway network an illusion
One researcher has determined there are at least 90 different ways to put a price on something we all need one way or the other: the road-based transportation network. Whether through flat fees, tolls, distance-charging or a myriad of variations, the idea is fundamentally simple: you pay for what you use.
It’s fairer, more transparent, potentially more equitable and ideally more affordable than what we have now.
Economists love it: Those who drive more will pay more; those who drive less will pay less. Price will affect behaviour.
Politicians find it appealing as a revenue source to fund the mounting demands for infrastructure and the maintenance costs for what we already have.
Transportation engineers and urban planners think it’s a great way to reduce congestion.
Environmentalists believe it will encourage less use of the car.
The trucking industry can see that might make it easier to move goods.
Conservatives like its market-based approach; liberals can see ways that it provides equity.
Cities that have tried it love it.
So why is it so toxic?
Because it takes away the illusion of ‘free.’ It matters not that we pay for the road system in a variety of ways — through gas taxes, property taxes, income taxes. For most of the last century, we have hidden those costs. Once a car is purchased, the insurance paid and the gas tank filled, the next trip seems to be free. And we like free a lot, even if it’s an illusion.
And woe to the politician who stands between us and free.
Visible road pricing is what’s called a category shift: taking something we believe we have already paid for, and then putting a charge on it. The reaction is emotional and hostile: Government gets charged with a ‘cash grab,’ and a host of less printable descriptions.
The key word there is ‘visible’. If a transparent scheme of road pricing is politically unpalatable, how about one that isn’t?
What if road pricing was more like a cellphone plan? How much, for instance, does a single call cost? I’m sure you have no idea. So what if driving was more like that: a service you paid for based on your use, but which seems more like a flat fee with options, paid for once a month, taken out of your account invisibly, but always offering you competitive deals and cheaper alternatives? Government, on the other hand, gets a reliable, sustainable source of revenue, but without the backlash.
It’s happening already. Car sharing, for example, is changing our relationship with the automobile: you contract for a service, not the vehicle, which someone else looks after. You can bet the fleet managers of your car-share plan know to the metre how long you’ve driven, when you’ve driven, what you’ve driven, sometimes even where you’ve driven — and billed you accordingly. But it’s all embedded in the software and paid for separately. That’s a new kind of road pricing.
That wave will soon become a tsunami with the arrival of autonomous vehicles, transferable pay media between transit and car-sharing, and dozens of new financial plans and relationships between fleet managers and drivers.
Once the tax is hidden in the price of the trip, then it may be politically possible to use pricing to create incentives, particularly to address the problem of unwanted congestion.
This process will take some time; It likely can’t be imposed on existing drivers with their own cars unless there are services they voluntarily want. But at a certain point, everyone will be contributing to the transportation system as a whole through some form of pricing —— whether variable transit fares on Compass cards, surcharges on car sharing, or, for a while, tolls on new infrastructure, and traditional taxes — until the system is rationalized through acceptable technology, incrementally introduced.
Now is the time to establish the principles on which, ultimately, any pricing system should be based. It ideally would:
- Include the full economic, social, and environmental costs of driving.
- Provide incentives for users to benefit according to the time or frequency of road use.
- Make the choice seamless among car, bike-sharing and transit, reinforced with up-to-the-minute information.
- Dedicate the revenues to alternatives that make cities better places to live and move.
- Offset inequities, just as we do with some sales taxes.
Now is also the time to familiarize the public with successes elsewhere — and their competitive advantages. In particular, to show how we collectively save money, whether through more efficient management of our system or building less infrastructure that we won’t really need.
Road pricing is coming one way or another. It just won’t be called that.
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To follow the road pricing discussion, go here.
Sometimes when I think about the various beliefs I hold, I discover a few of them appear to be contradictory.
I strongly believe the ALR shouldn’t be turned into a suburb, and the government should intervene to prevent that from happening. Yet, I also believe in free markets and that individuals should generally be allowed to make choices without government meddling. That the market should be able to allocate resources efficiently. This contradiction disturbed me.
I think sometimes one dumb market intervention necessitates other market interventions. By making the road system free to use, we are seriously skewing incentives and seriously skewing people’s decisions. It incentivises the construction of suburbs in the ALR – in fact, it makes the lifestyle possible. It then makes it necessary for the government to step in and prevent the inefficient outcomes it has incentivised.
If we built the true costs of using the road system into the road system, the demand for housing in the ALR would probably fall dramatically. If we had a market based system for allocating space on highways, we probably wouldn’t need to use the government to prevent the suburbanization of farmland because people wouldn’t want to live in suburbs. Driving on highways would be too expensive if drivers had to pay for the true costs, and the most efficient use of the ALR would be farming, or industry, or whatever. We wouldn’t need the government to dictate uses for land and we could let individuals decide for themselves what they wanted to use their land for.
Maybe that squares the proverbial circle.
Your cognitive dissonance is not uncommon, I think.
There is no such thing as a free market. A market is a human creation; a market cannot exist without humans. And if it requires humans, it cannot be free.
In reality, “free market” is a label that means “market that runs in accordance with my biases.” It’s just that we humans are unaware of many of our biases, so when we see a market structure that matches those biases, we have a tendency to see it as neutral, or “free”.
If road pricing becomes more transparent, do you think that people will change their habits by not doing activities or attending events that are far away (hiking, berry-picking, festivals and markets), not visiting friends who live far away and not giving free rides to friends who need to carpool?
Driving isn’t the only way to get to such events. Decreasing driving must go hand-in-hand with increased levels of service for other modes of transportation.
Remember: oftentimes, friends and family live far away because of the way we’ve designed our cities around car-based transportation. Our land use planning and transportation planning are strongly intertwined. The friend that lives a 60-minute drive away could also live a 60-minute Skytrain ride away.
Festivals and markets can (and should) happen in our own neighbourhoods.
Access to hiking and berry picking is perfectly easy with a functional transportation system that includes active transportation, public transit, car sharing, etc. It’s not too hard to take a water taxi or ferry over to Bowen Island or the North Shore for a nice hike. It should, and could, be more convenient to ride a bike to pick berries (remember the ALR).
As for your friends giving you a ride without charging you…. well, I guess that depends on your friends. Would your friends buy you a beer from time to time?
Invariably, yes.
According to economic theory (and strong empirical evidence), if mobility is a normal good (which is it), as price rises people will consume less of it.
As the price of moving around rises, people will move around less. That’s not a bad thing. Moving around in cities is costly. Right now, moving around is made artificially cheap and so people move around MORE than is socially efficient.
When road pricing is applied smartly,
transportation infrastructure is seized to handle the average demand, not the peak demand, hence
the collective cost is much less, so people have more money left in their pocket.
If the example of London or Stockolm is an indication: congestion charge doesn’rt apply on WE, neither after 6pm:
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hiking, berry-picking, attending festivals and markets not visiting friends who live far away, become free (or so)
…”subsidized” by people using the infrastructure in peak hour.
For other period, car pooling will explode like it does in Europe (yes passenger will have to pay their share,… as in Europe, but road pricing apply per vehicle not people).
With a full road pricing scheme, transportation become cheaper, even if peak price become more expensive…that is because the infrastructure is better seized and better used.
That is also exactky what has happened with the deregulation of the airline industry:
fixed seat price (leading to some flight becoming full very quckly, while other kept empty) has yelded to demand management, moving demand of some flight to other…keeping the planes well occupied at all time: the result is that today everyone can travel at basically any time, but if you have flexibility you can flight for very cheap.
read
“transportation infrastructure is sized to handle the average demand, not the peak demand, hence the collective cost is much less, so people have more money left in their pocket.”
Here’s my list of issues with road pricing:
1) The fear with road pricing is that this will be yet another tax on top of all the taxes we already pay for. Do you honestly think that introduction of road pricing would result in elimination of all other driving related taxes such as gas taxes, parking taxes, transit levy’s and would also reduce your income tax or property tax by the amount being used to maintain the roads? Of course not…
2) Why are we pretending that roads are now free? How are they free when I am paying for them though all kinds of taxes collected by all levels of government? They may be free for the hobos, but they are certainly not free for me or anybody with sufficient income to pay taxes
3) Way would pay as you go system of tax collection apply to some things and not the others? Should healthcare be pay as you go? Should you pay more taxes for schools, parks and playgrounds if you have more kids?
4) Road pricing would be effectively a regressive tax (well similar to current car ownership really) punishing the poor and making them less mobile
5) What happens when people start driving less in response to road pricing. For years, everybody was all for jacking up gas taxes to “discourage driving” and provide incentives for more efficient cars. When gas consumption dropped now everybody’s crying about it …
1) Yes – we are looking for more revenue to pay for transit, remember? We can always cut taxes elsewhere if we end up with too much money, but I doubt we will.
2) They aren’t free, they are… “free”. Meaning users don’t pay for them, taxpayers do. Even though I don’t drive, I pay for roads. You can drive on roads as much as you want and the amount you pay towards roads will be the same. That incentivises driving a lot. This is the exact problem road pricing hopes to correct.
3) Maybe, but there are some social benefits to making some things government provided. The government’s role is to correct market imperfections. When there are negative externalities, the government should tax that thing. When there are positive externalities, it should subsidize that thing. There are positive externalities to healthcare and parks, and negative externalities to driving and building roads.
4) Probably. But that is easily corrected in the same way poor people receive a GST rebate and a carbon tax rebate. Gordon touched on this in the article.
5) That would be awesome. Reducing driving is one of the goals of road pricing. If driving fell so much the tax revenue wasn’t able to cover transit spending, we would of course need to find another tax.
So to sum up your responses – we would be taxed more to get less…and if taxes are not sufficient we would be taxed some more…Good chance of that passing…Remember this is the province that rejected HST…
No, we would be taxed more to get transit. That’s what the ENTIRE issue is at the moment in the urban planning community. How should we pay for transit?
The issue is not about whether it would pass. Probably not. In fact, any new tax of any kind to pay for transit will probably fail in the referendum. The question is whether its a good idea.
Well OK – I can see how you would pay for Transit using road pricing as an added tax. But then you cannot claim that you pay for road use when you use the money collected to pay for something else (Transit). Either road pricing pays for actual road use (road construction and maintenance) or it’s just another tax on top of everything used to fuel general revenue or fund a particular agency.
Gordon, your premise does make some sense. Implementation is complicated.
Off the top it makes perfect sense that bicycle riders would also pay. Their pathways are not free as we know. Right there is a political challenge. RFID technology (same as Port Mann system) can solve the issues around payments, although, that will not happen for quite a few years yet. Especially in Canada where privacy has to be compromised and bike riders will not like it (everyone will have wear an electronic ID device).
Another massive issue that I see would be the concurrent explosion in prices for inner-city dwellings if passage from the suburbs became quantitatively more costly than the present Metro gas tax and the parking tax. You would be able to completely throw affordability out of the window in Vancouver, if we haven’t already done so. (Expect high-rises all along Cambie, not just at Oakridge and Marine Drive). Think Seoul and Hong Kong, not Victoria bungalows. Vancouver will unfortunately not be moderate when residential blocks go up. Buildings will not be restrained in size as is Barcelona, with four floors and hundreds of chamfered intersections that provide mini public spaces, or gradually stepped back from the street as is Athens, or generally around eight or nine floors, as were Paris and Brussels built before the advent of elevators. Vancouver is going up. Up high. It makes for the most affordable construction methods and provides quick density to justify transit expenditures.
Too bad the Arbutus Lands development doesn’t get more recognition. High density not high-rise.
The other major obstacle in BC will be progressives that do not want all levels of earners paying the same rates for usage. You do say this can be offset in the same way sales taxes are. Remember all the exemptions permitted by Translink? What do they call that, a boondoggle? A whole sliding scale with exemptions and exceptions and special deals and on, and on, will make it a BC Special of expensive bureaucratic divisiveness. But, I guess it will come.
No, obviously bicycle riders shouldn’t pay for road pricing, don’t be silly. They are a minuscule segment of the transport modeshare and they travel small distances with very little impact. People who say that kind of thing are being intentionally obtuse just to stick it to bicycles. If we charged bicycles, we would raise no money and effectively banish cycling in the city. If we charged bicycles, then they would need to be registered and given licenses… gah, it’s not even worth contemplating it’s too stupid.
If we incrementally raised the price of car transportation to a level commensurate with the costs, I doubt there would be an “explosion” in demand for urban dwellings. Although demand would increase for them, which is good! We would build more to accommodate additional urbanites, which is good. People would continue to scream, but it would continue to be in vein as the inexorable tide of market forces sweeps them aside.
Bike pricing of various kinds is being discussed at the highest levels in Chicago and New York. It’s not silly, it’s the thrust of Gordon’s article, which is user pay. Quite. If one is considering streets and roads then there is no justification that the poor, sick and infirm should subsidize bicycle paths through general taxation, either.
… or we can start building walkable, bikeable, busable communities around the region, and not just in certain pockets. There are tons of surface parking lots and otherwise wasteful spaces that can be developed before Vancouver turns in to Hong Kong.
Gordon’s point about full cost pricing would apply to bikes too. Without even considering environmental costs or the opportunity cost of space (bikes being only as wide as a pedestrian) the wear and tear of a heavier vehicle on the road surface is more than a lighter one. (Also acceleration rate is vastly higher, which is also key to F=ma friction, but let’s leave that too.)
SUV here suggests a fee of 1c/kg https://twitter.com/situpvancouver/status/402480235700297728 so ~$0.70 for pedestrians, ~$10.00 for cars. SUV’s old dutch sit-up bike might cost as much as $1 for the same distance. Also distances covered by cars tend be more, so drivers will be shelling out a lot more daily than all other modes. I wonder which tax base will be worth the transaction cost to collect?
I’d say that should provide all the right incentives land-use wise.
I can’t believe people are serious about tolling bicycles. What do you hope to accomplish by doing that?
I hope its not to raise any money, because you won’t raise any. I hope it’s not to affect behavior in a positive way, because you will just kill the cycling scene. It just appears to be some contrived sense of cruel justice or something.
“Wear and tear” from bicycles on the road? Are you serious?
Tolls on bicycles is a classic red herring — something that draws attention away from the central issue. The central issue at play here is how do we pay for alternatives to the motor vehicle? Does anyone seriously believe that we should not build and enable alternatives?
Many of these red herring arguments pop up around the topic of transportation. Some propose to levy silly costs on those who prefer to ride a bike now and then. I strongly believe that many of those who advocate for such red herring proposals are in fear that car culture is being threatened, and are grasping at straws, no matter how irrelevant, ill-advised or illogical these proposals may be.
What’s not to love about road pricing:
Ken Ohrn writes:
The central issue at play here is how do we pay for alternatives to the motor vehicle?
Spank seconds with:
the ENTIRE issue is at the moment in the urban planning community. How should we pay for transit?.
All that gives reaon to Dejean K:: road pricing is hence just a “robin wood” tax, and to Eric too (Why not the cyclists?)
What’s not to love about road pricing is that when it is invoked, it is as a way to fund transit, or other darlings of the urbanist community.
Road pricing need to be considered under a pure economic lens, that is as a transportation demand management tool aiming to achieve the most efficient use of our road transportation network. That it’s, all other rationalization are rubbish…(*)
Rod pricing involves the question of allocation revenue of such scheme.
It is natural, to allocate it toward instrument able to lower the road usage barrier (price).
Transit is one of this instrument… among others, toward that. But transit shouldn’t be the reason for road pricing , neither the lack of it invoked against road pricing., (suite on Stephen rees blog)
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Well, obviously if we’re going to charge cyclists, we’ll need to charge pedestrians too. After all, there’s a cost to maintaining sidewalks, right? How absurd to take the user pay philosophy to this kind of extreme. I agree that the cycling mention is a red herring put forward by the incurably car-addicted. The only plausible consideration might be an annual (nominal) bike licensing fee (decal system) with receipts used to offset costs such as safety campaigns and so on.
Funds are needed for expanding the bike-path network and the signage, etc. It is not unreasonable to expect those that utilize the system to contribute?
The argument cannot be successful forwarded that cycling is inherently good, therefore all must pay for the network. Particularly when suggesting that all drivers must pay for, something else, transit. Many drivers have to drive vehicles, and cycling, for many of them, is a complete impossibility. Demanding that they pay for transit and bicycle pathways, as well as substantially paying for the road system too, through specifically elevated and dedicated gas taxes and road-pricing, is unreasonably loading all costs on to one group.
The ‘inherently good’ argument is also presumptuous and ignores those that have to drive, such as those that carry essential heavy equipment, supplies, etc.
Would you have the price of candy and sweet snacks raised so that they would then subsidize carrots and apples, that would be given away free? Carrots and apples simply being good. Therefore no charge, the state will pay.
Vancouver has a tendency to be moving towards an idyllic wealthy resort with glorious bike pathways, fully illuminated, carved through the city. The elderly, the infirm, tradespeople and the less well off that drive around working for living, lugging equipment and goods and etc., etc., should not have to subsidize this sporty elite no matter how worthy and righteous they might consider themselves.
I guess for you the means justify the end.
The outcome of taxing bicycles doesn’t really matter, as long as we can have our morbid sense of justice. It doesn’t matter that the administrative costs of the bike-tax is greater than the revenue brought in, or that we’ve made extinct the burgeoning urban cycling community. At least those bloody cyclists got theirs.
See, the difference is that while the bike-tax is “means oriented”, road-pricing is “ends oriented”. We want road-pricing to achieve a desirable end. Bike-pricing would not achieve a desirable end, so we shouldn’t implement it.
I do love it when elitist. righteous car drivers call my elderly, titanium-kneed, arthritis-addled self, pedaling with paniers full of groceries, ‘sporty’.
Shows that my decades of biking-for-transport before and after retirement must have paid off!
It seems like a mileage tax is a far more complex solution than simply raising the gas tax. The mileage tax seems like a plan supported by the oil industry more than a solution to transportation funding. Who else would like to see taxes shifted to fuel-efficient car drivers?
We should have both. The idea is to make people pay for the costs of their activity.
Obviously using gas has negative costs on society, so it should be taxed.
But, building roads and bridges is costly too, and people who use them should pay. Even if you drive an electric car, you should still have to pay for your use of the infrastructure you drive it on.
@Spank, that sounds like an argument someone owning expensive properties or having a high income might make, since implementing a mileage tax would be far more regressive than paying for infrastructure via income or property taxes like we do today.
Au contraire! I am a starving economics student. I just get off on efficiency arguments.
In fact, I don’t own a car, so it would benefit me and other poors if drivers paid for their own costs of driving instead of using general government revenues.
Often the taxes that encourage efficiency are regressive. There’s an easy solution – send poor people rebates in the mail. Although efficient taxes, the carbon tax (or any consumption taxes) would be regressive if we didn’t rebate the poor, but we do.
@Spank, there are negative externalities to building bikes too. All that metal and plastic. Tough to admit but you have to.
As for; “See, the difference is that while the bike-tax is “means oriented”, road-pricing is “ends oriented”. We want road-pricing to achieve a desirable end. Bike-pricing would not achieve a desirable end, so we shouldn’t implement it.” This is simply subjective, self righteous arrogance. Strange as this may seem to you, your supposition is not automatically accepted by everyone.
Again! ” it would benefit me and other poors if drivers paid for their own costs of driving instead of using general government revenues.”.
The fact that you do not own a vehicle explains why you have no idea what taxes and fees go to governments, by those that do.
You ignore the fact that many drivers are carrying goods and equipment that cannot be strapped onto a bike. You ignore the efficiency of a vehicle for those that have multiple stops to make. This is not Disneyland.
Would commercial drivers also receive rebates (great bureaucratic efficiency) by Canada Post, or should we anticipate a nice whack of inflation as the costs of goods and services transportation is ramped up?
Eric! I love you, but you don’t know what externalities are. They are transactions that negatively (or positively) affect a third party, that isn’t directly involved in the transaction. Building bicycles doesn’t affect third parties. Maybe it takes some carbon to build a bike, but that’s why we have a carbon tax!
I don’t see what’s wrong with my “means oriented-ends oriented” point. You haven’t provided an argument against it. Remember, neither arrogance, nor subjectivity, are argumentative fallacies.
Why would not owning a car preclude me from having knowledge on the tax regime? Odd point.
I don’t see why road tolling would make moving equipment around impossible. It just means that those who move their equipment around would pay for the costs of doing so, instead of the government paying for them. Theoretically, other taxes could be lowered with the new revenue (like with the carbon tax), or other government services could be provided.
No, commercial drivers wouldn’t receive a rebate. That would be corporate welfare. However, we could lower the corporate or income tax rates, as we did with the carbon tax. Or we could use the revenue to pay for transit expansions.
@Spank, You are so cute and patronizing. You are so clever, aren’t you? Unless your bike is made from sticks and stones there are externalities in the manufacturing process. Nobody can deny that. Your means oriented point is null, you suppose, because you automatically and incorrectly assume that everyone, without question, considers that biking is better than driving. Wrong.
Wrong too that car drivers do not pay for infrastructure. Purchase taxes, gas taxes, licensing fees, disposal fees, taxes on repairs and maintenance, insurance fees, etc.
Independent small-business, contractors, sales and service personnel and trades people that carry equipment would not be eligible for reductions in business taxes because the vast majority of them are not incorporated. Inflation would be instantaneous.
Explaining that you consider assisting commercial drivers in their working expenses to be “corporate welfare”, says much. Do you also consider that allowing the construction worker to deduct the cost of safety boots to also be welfare?
Why should a construction worker or tradesperson pay disproportionately for the transit infrastructure that they are unable to utilize? You want to start charging school buses and ambulances too?
I love monopolizing threads and engaging in personal tit-for-tats. It’s kind of rude on our part, but Eric, you are so charming I just can’t resist. Plus, I’m anonymous and it warms my cold troll heart.
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What negative externalities are generated by building a bike? I actually don’t know what you are on about. Besides – whatever externality you are thinking of should be taxed directly… not the end product, which is presumably a bicycle. This is why I support a carbon tax, not a lawnmower tax.
I do think biking is better than driving. That doesn’t mean I think driving should be banned. I just think drivers should have to pay for the costs of driving, which are substantial, and many of which are currently borne by the government (through general tax revenue) and society.
True, sole proprietorships do not pay corporate tax. Solution: reduce the income tax instead.
Inflation? No… I’m straining my brain trying to complete your argument for you, but I cannot see how a road pricing scheme would lead to inflation. Perhaps you are mixing up inflation and a one time rise in the price level for one thing.
Macroeconomics corner:
There are basically two things that cause inflation: sustained expansion of the money supply by the central bank (generally to raise seigniorage revenue) OR expectations of inflation.
The more you know…
Yes I do think tradespeople should have to pay nominally more than they currently do to drive their vehicles around. Is this because I hate tradespeople or the working class? No. I just like efficiency and ending welfare to the relatively affluent.
Road pricing is a great idea, and used in many cities already, mainly highways, but also now starting in inner cities like Stockholm or London. It even allows to toll roads by time-of-day. Free before 6 am, then 5 cents a km until 9 am, then 2 cents until 4 pm, then 10 cents to 6 pm, then 2 cents to 9 pm, then free to 6 am .. etc.
This could easily be installed at choke points in Vancouver, say Granville Bridge, Cambie Bridge, Burrard bridge, #3 road bridge, tunnels, airport overpass, SE Marine Drive, etc.
Most politicians are risk averse administrators. I wish more had the guts to make car use more expensive in cities. Where is Rob Ford for Vancouver (minus the nasty smoking, of course) ?
Let’s start with Vancouver airport, well served by a fast and inexpensive train. Then the 3 bridges to downtown, then other choke points. car use is ridiculous in Vancouver. Far too cheap. The quality of life downtown, say for Christmas shopping, is miserable. 3 m of side walk 91.5 m on either side) but 15 m of road in between got to stop.
Pedestrians: get your city back !
Great Trivia.
In May 2011 the Mayor of London, Boris Johnson, raised the issue with the President of the United States, Barack Obama, who was fined £120 after driving through London in the Presidential state car without paying the toll (London Congestion Tax) during a state visit to Buckingham Palace. The USA subsequently claimed diplomatic immunity. A Transport for London spokesperson noted that US embassies do pay tolls in Oslo and Singapore. Transport for London estimated that £51m was owed by at least ten foreign embassies at that date (£50 million in unpaid congestion charge fines and £491,000 in parking fines), with the USA owing the most at £5 million and Russia second at £4.4 million.