A new study proposes tolls up to $2 a mile for driving on roads in Britain. The top rate would apply only to the most congested roads. As an economist, I like the idea. The concept involves placing electronic chips on cars that send signals to a satellite. You’d get a bill in the mail based on where, when, and how much you drive.
This is a sensible way to pay for a road system – those who use it pay for it. Toll payments would be offset by reductions in taxes on the car itself – a fixed charge unrelated to use of the roads, and fuel – related to fuel consumption but not to the costs of road construction, maintenance, and congestion, all of which are higher in urban areas.
The costs of installing the system are considerable, but the estimated decrease in congestion delays of 44% in and around London would go a long way towards repaying it. The Guardian has the story.
Update: In the comments section, John Top states “I find it hard to believe the the government would offset the money raised by congestion charges by returning it to the taxpayers. They’ll find a way like they always do to use it for their own largesse.” Unfortunately, he’s right. As Sean Hackbarth notes at the American Mind, we are “still stuck with a (3%) “luxury” tax on telephone calls that origniated in during the Spanish-American War and was revived to pay for WWI.” I’m for more efficient taxation, provided that new taxes are revenue neutral, i.e. offset by decreases in less efficient taxes. As Hackbarth’s post makes clear, this is not an easy trick to pull off.