Pollution Free Cities: Pros and Cons for Road Pricing in Canada

Monday, August 27, 2012

Pros and Cons for Road Pricing in Canada

A simulated-colour image of Greater Toronto Area taken by NASA's Landsat 7 satellite from 2004. (Photo credit: Wikipedia)

Congestion Relief: Assessing the Case for Road Tolls in Canada (36 page pdf, Robin Lindsey, C.D. Howe Institute Commentary, May 2007)

A look at arguments for and against road tolls is reviewed today, noting that in the 19^th century, public and private toll bridges, roads, and ferries were prevalent in Canada. As the paper concludes after making several key recommendations, “that toll roads will be resurrected in the twenty-first century and seem like an obvious innovation whose time should have come (again) long ago”

Key Quotes:

“road transport infrastructure is aging. Existing funding mechanisms such as the fuel tax are unlikely to yield enough revenues to pay for future maintenance, rehabilitation, and new construction — at least without large and politically unpopular increases in tax rates”

“By raising the costs of driving, … road pricing sets off a virtuous circle of effects for public transit systems that share the right of way with cars. Transit vehicles speed up when tolls are imposed, because there are fewer cars on the road. This attracts more travelers to transit. In response, transit operators improve service by adding routes and increasing frequency”

“[in Holland]..fewer than 10 percent of respondents said that spending toll revenues on new roads or to reduce driving costs was “unacceptable” or “very unacceptable”, while spending on the general budget was opposed by nearly 75 percent of respondents”

“[in Germany]people become more favourable toward road pricing if it seems inevitable, which suggests that holding a referendum after a trial than before is most likely to improve the prospects of a yes vote”

“A recent poll of Canadians that asked “How should new greenhouse-gas reduction programs be funded?“ found greater support for tolls (37 percent) than for an increase in the price of gasoline (20 percent) or in income taxes (18 percent)”

Excerpts from key conclusions:

"Congestion is a serious and growing problem .. Canada’s nine largest urban areas, by one estimate, face annual costs of $3 billion… the loss from congestion and shipment delays in the Greater Toronto Area (GTA) is some C$2 billion annually.. In per capita terms, the annual cost ranges from C$17 for Hamilton to C$270 for Toronto
Estimates of the annual costs for Europe include US$38 billion for the United Kingdom and US$800 million to $1 billion for Stockholm in lost time, traffic accidents and deaths, and worsened environmental conditions.. In per capita terms, these costs are roughly US$210 (for the United States), US$630 (for the United Kingdom), and US$670 (for the Stockholm urban area).
Neither fuel taxes nor parking fees are effective in dealing with traffic congestion..Road-pricing’s usefulness in charging for road damage, insurance, and so on are a bonus.
Net revenues from road charges.. can pay for road construction and maintenance, to support other modes of transport, or to reduce other distorting taxes; they can also enhance the public’s acceptance of road pricing by compensating potential losers.
Claims that road pricing hurts the poor are exaggerated. Poorer would benefit if road-pricing revenues were used to enhance public transport service. Also, policymakers may choose to address equity concerns by offering discounts or exemptions”