Who Pays for Highways?


To reiterate something I said yesterday, the idea that road spending is entirely paid for by the gasoline tax is simply mistaken. Public sector budgets are complicated things, especially in situations like America's road network where a large variety of agencies are involved, so sometimes different studies get different results but under no circumstances is it the case that the gas tax covers everything. Here, via Aaron Naparstek is a study from UC Davis' Institute for Transportation Studies. The abstract:

I make a comprehensive analysis of all possible expenditures and payments, and then compare them according to three of the four ways of counting expenditures and payments. The analysis indicates that in the US current tax and fee payments to the government by motor-vehicle users fall short of government expenditures related to motor-vehicle use by approximately 20–70 cents per gallon of all motor fuel. (Note that in this accounting we include only government expenditures; we do not include any "external" costs of motor-vehicle use.) The extent to which one counts indirect government expenditures related to motor-vehicle use is a key factor in the comparison.

And, look, that's fine. There's no particular reason why the fiscal cost of infrastructure investment should be entirely borne by user fees. But critics of transit systems are forever moaning that these systems require subsidies to stay viable. As indeed they do. But so does the highway network. The issue isn't whether to subsidize, it's what to subsidize and to what extent.

Photo by Flickr user bike used under a Creative Commons license