Mr. Sproule is a businessman who studies government and ethics in his spare time. He has written several articles for national magazines.
Suppose you drove up to a turn- pike pay booth and were told: “The toll is $3.00 for this road plus $2.00 for the same trip if you had used the state highway.” You might well reply: “What are you talking about? I’m not going to pay two tolls to travel one road!” Yet you do pay twice every time you set wheel on a toll road.
We have two separate unrelated highway systems in the United States, the toll roads and the taxroads. The toll roads subsist on revenue collected at their own toll booths. They were built with money obtained from sale of bonds to private investors. They get no tax money. The tolls pay off the bonds and provide for upkeep.
The tax roads — federal, state, county, township, and city — are built and maintained for the most part with revenue from highway-user taxes, chiefly the gas tax which averages 83/4 cents per gallon of gasoline. You pay at the filling station, and of course there are no tolls.
This being the case, it is clear that when traveling a tax road you should pay only the tax, and when on the toll road, only the toll. On the tax road system this holds true. But on the toll road you pay both toll and tax. It’s as if you paid only plane fare on the plane, but plane and rail fares both when riding the train. Obviously the trains would be limited to special routes where people were willing to pay twice for one trip.
The Highway-User Tax
As the name “highway-user tax” implies, the gas tax is supposed to be levied only on users of the tax-supported highway system. For example, the farmer is refunded all tax he pays on gasoline used in his tractor. It is recognized that he should not pay the tax, since he is using this gasoline for purposes other than travel on the roads for which the tax is levied.
By the same token we should get a refund of gas tax on gasoline we use on a toll road. We, too, are using this gasoline for purposes other than travel on the roads for which the tax is levied. There is no reason why we should pay both toll and tax to travel a toll-supported road any more than we should pay both for the use of a tax supported road.
Alternative Procedures
There are several ways by which the unfair “Second Tax” could be removed. Gasoline at toll road service stations could be sold tax-free; or, the toll road traveler could present receipts for tolls paid and be given a refund as in the case of the farmer and his tractor fuel (the receipt indicates mileage, from which the amount of gasoline used — and thus the tax paid — can be calculated as a check.)* Probably the most practical, most cheat-proof, and least cumbersome method would be to make gas tax refunds payable to the toll roads so that the customer would get his refund in the form of a toll reduction. This would be administratively simple because the toll roads keep accurate records of mileages traveled by each type of vehicle. The average mileage obtained per gallon of gasoline for each type vehicle is known. The rest is simple arithmetic.
Under the toll road arrangements in nearly all cases, the proposed gas tax refund would automatically be returned to the vehicle owner as a toll reduction because the toll road agency exists only to pay off the bonds and provide necessary highway maintenance.
Remove the Road Blocks
A common question among victims of the great traffic jam is: “Why don’t they build more toll roads?” The answer is that double taxation makes it uneconomical. Only in a few very favorable locations is there the prospect of enough customers who would find it worth-while to pay both toll and tax. Removing the tax, by refunding it, would set the toll roads free and probably result in the immediate construction of many new miles of toll superhighway. They get none of the tax anyway, and their customers would be relieved of an unfair burden. Traffic would flock to the toll roads, raising income and allowing lower toll rates in a beneficial circle of cause and effect.
At present the average extra charge for use of a toll road is 11/2 cents per mile for automobiles, while the “free” road motorist pays only the equivalent of about ¾ cents per mile in taxes and fees. However, estimates used to predict costs of the big highway construction program now getting started are recognized as much too low. In the near future the federal and state governments are going to be faced with three choices : raise highway-user taxes; borrow; or do without some of the needed roads, or at least delay them still further — already the original 10-year borrowed money plan has given way to a pay-as-you-go program that will take 16 to 20 years for completion. It is conceivable that under the refunding plan herein outlined and the impending rise in highway-user taxes, the cost of using toll roads might be no greater than the cost of using tax roads. In other words, the tax refund might be sufficient to cover the toll charge.
Private enterprise has taken several close looks at the toll road business but always backed out, basically because of the double taxation handicap — that is, not enough traffic at reasonable toll rates could be foreseen. Under the gas tax rebate plan, investors might get into the highway picture with both feet — not merely as purchasers of bonds, but as builders and operators of toll roads. New and cheaper pavements, more efficient toll collection methods, separate lanes or roads for trucks, and streamlined maintenance are among the possibilities, should the ingenuity and energy of the entrepreneur be injected into the business of providing the arteries that carry the life-blood of our motorized society.
Alternatives
An alternative to giving toll roads new life is a policy widely favored in Washington calling for the federal and state governments to pay off toll road bonds and turn these highways into “freeways.” This would divert large sums of tax money away from construction and maintenance of the “free” system, which is already staggering along without sufficient revenue.
The federal and state governments might well consider eliminating gas tax paid for toll road travel, leaving only the toll, and allowing toll roads to be built wherever practicable as parts of the new interstate superhighway system. Then their hard pressed engineers could concentrate on the remaining great mileage of primary, secondary, and feeder roads, which it seems will be task enough in view of mounting difficulties and rising costs. Such a policy would provide needed highways sooner, in response to the growing demands of a growing population.
¤This method is now used on the Massachusetts Turnpike with respect to the state tax.
Ideas On Liberty
Free the Railroads
The government has proceeded to subsidize and is continuing to subsidize all of the railways’ competition. Taxes build highways, pay for barge lines, provide airline terminals, and underwrite many of the costs incurred therein. But the railways are taxed mightily in their real estate holdings and additionally are governed by federal and state laws to such a point that they are compelled to maintain losing lines, pay for unnecessary stations and station personnel, and are prevented by law from streamlining their own operations and competing on an equal basis with their own competition.
This is the story in a nut-shell. What needs doing, of course, is the freeing of the railroads both from silly and featherbedded union contracts, and from government regulation and control. What we are fearful of, is that the railroads, instead of standing pat on this point, will demand their share of tax money in maintaining their industry, and in the end become nothing more than a sustained and expanding burden on the taxpayer.
The railroads are in trouble. But if they want to get out of their malaise permanently, they are going to have to stand up free and strong and refuse to go along with tax support.
From an editorial in the Colorado Springs Gazette Telegraph, November 12, 1957.
