Better Motorcoach Trip Times

By Brian T. Schwartz and Dennis Polhill

Road-users can get more mileage from fuel taxes they already pay. But some federal officials and states are considering increasing fuel or other taxes. Bad ideas.

Much of the current fuel tax does not maintain roads. Fuel taxes penalize less-wealthy drivers and encourage traffic congestion. There are better ways to finance roads.

Instead of increasing taxes, political leaders should stop spending current fuel-tax revenue on rail transit and other boondoggles. For every dollar from federal fuel taxes, more than 17 cents supports “mass transit purposes,” according to 2011 federal highway statistics. Just as non-drivers should not subsidize roads, drivers’ taxes should not subsidize other services.

Some argue that mass-transit benefits drivers by reducing traffic, so drivers should fund it. Nonsense. By such reasoning, government should force drivers to subsidize brakes for tractor-trailers because drivers benefit when huge trucks have functioning brakes.

“Only about 60 percent of the gas tax money … goes into highway and bridge construction,” former Transportation secretary Mary Peters told PBS.

A Heritage Foundation analysis of the federal Highway Trust Fund (HTF) concurs: “[M]otorists will receive only about 62 percent of what they have paid into the fund for general purpose roads and safety programs.”

The HTF is even worse for most states. The majority of states send the fund more gas tax money than they get back. States would be better off keeping their own dollars. According to the Government Accountability Office, 27 states receive less than they contribute to HTF. Of the states that receive redistributions at the expense of the 27 states, those benefits are diminished in 13 of the 23 states because they contribute more federal gas tax funds to subsidize public transit in other states than they receive.

Those 40 shortchanged states should work together to opt out of the failing Federal and too-politicized HTF system. Worthy of consideration is Utah Senator, Mike Lee’s Transportation Empowerment Act that decreases over 5 years the Federal gas tax from 18.4 cents to 3.7 cents.

Regardless of how governments spend fuel tax revenue, imposing fuel taxes to finance roads is unfair to less-wealthy drivers, who tend to drive older, less fuel-efficient cars.

Fuel taxes also promote traffic congestion, which wastes time and wealth. Rush hour occurs because the price for road use — fuel taxes — does not increase during peak-demand hours.

How bad is congestion? Perhaps the only thing worse to the motor coach industry than a slow trip is an unreliable trip. Annually the Texas Transportation Institute updates the Urban Mobility Report. The 2012 TTI UMR put the annual cost of traffic congestion nationally at $121 billion. With annual costs approaching the cost to eliminate traffic congestion and no resolution in sight via government leadership, toll roads have begun to mushroom. Since 2003 toll road revenues nationwide have grown in excess of 30% per year.

Eradication of traffic congestion will yield benefits beyond greatly improving the value of the motor coach industry. Less congestion means less wasted fuel and fewer emissions. TTI estimates 2.9 billion gallons of fuel wasted nationwide in 2011 due to traffic congestion.

Instead of increasing taxes, better ways to finance road should be explored. Congress can lead by allowing 50 states to become laboratories for innovation. The fuel tax should be retained only until appropriate market financing systems can be implemented. As the express roads become self-financing, fuel tax revenues can be reallocated to maintain lower-capacity roads.

Lower tolls during off-peak hours using demand-managed electronic tolls reduce traffic congestion by encouraging off-peak driving. By charging for road use instead of fuel purchased, tolls don’t punish those with less fuel-efficient vehicles. To be fair to toll-payers fuel taxes should be refunded when tolls are paid.

When roads become self-financed through tolls, decisions will become less politicized. Repairs will happen faster and will be better targeted. Capital improvements will be quicker and less obtrusive to routine functioning of the surrounding world. Politicians and special interest groups will have to go elsewhere to finds funds for their personal whims. Diversion of funds to subsidize direct competition to motor coach operators will be more difficult and less common.

Fuel taxes are unfair and wasteful. There are better alternatives. Instead of increasing the fuel tax, elected officials should ensure that revenue actually funds roads, rather than continuing to divert it to other purposes.

Brian T. Schwartz and Dennis Polhill are Senior Fellows at the Independence Institute, the Colorado free-market think tank. This article appeared in the December 15, 2013 issue of Bus and Motorcoach News.