The Oil Drum

44 comments on WSJ writes that gas taxes make sense

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EngineerAU on February 9, 2007 - 4:20pm

Sigh... and yet here in Georgia the Republican legislature thinks it is the height of market freedom to completely eliminate the gas tax and replace it with a sales tax on all goods and services in order to increase funding for roads. They're also talking about building a six billion dollar tunnel under the city (though it will end up costing much more than that) to ease congestion. Afterall, it worked so well every other time the roads were expanded. At least with the tunnel they claim it will be paid for with tolls, thought if the tolls don't cover the costs, the government will have to make up the difference whereas if the tolls return a profit, it will go into the pocket of the developer in the private-public "partnership". Isn't it great to be able to invest with someone else responsible for all of the risk?

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Valuethinker on February 10, 2007 - 9:49am

I think Macquarrie (the world's largest independent infrastructure financier) Bank did this in Bremen.

It didn't work, the cost of the tunnel toll was too high so people didn't use it.

On the other hand, the Toronto 407 highway did work: the government signed a 99 year lease with no regulation on tolls. Since the parallel untolled highway is jammed, the tolls have gone through the roof.

Another common trick is the Birmingham Bypass one. Trucks do far more damage to a road surface than cars-- (the damage is as a cube of the axle weight, so a 3 tonne truck can do 27 times the damage of a 1 tonne car). So the company running the Bypass priced trucks off the road-- they go by the free government paid for road.

We have lots of public private partnerships here in the UK for schools, hospitals etc. Basically they are a way of transferring fiscal burdens onto future taxpayers. The 'risk sharing' element is often quite illusory.

Georgia being Georgia, cutting the gas tax will be quite popular. Ironically, the poorest people don't even have cars, or don't drive much if they do, so it doesn't help them much. But they would never vote Republican (or even vote, in most cases). Whereas the suburban-dwelling SUV driver is a key Republican demographic, ditto the rural voter with a pickup truck. Roll on Georgia!