Is A Congestion Tax The Answer For Commuters?: News Releases: The Independent Institute

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News Release
February 7, 2007

Is A Congestion Tax The Answer For Commuters?

OAKLAND, Calif., Feb. 7, 2007—A proposal to tax commuters was among the key items in President Bush’s just-released budget request. Congestion taxing—also known as cordon pricing—would involve setting up electronic systems throughout the city, which would tax commuters as they commute during rush hour.

Transportation economist Gabriel Roth, is available to discuss congestion pricing as well as alternatives, such as road privatization. Roth is a research fellow with the Independent Institute and editor of Street Smart: Competition, Entrepreneurship, and the Future of Roads, with a foreword by Transportation Secretary Mary Peters.

The DOT estimates the total cost of U.S. congestion at about $200 billion annually, or almost 2% of GDP, counting wasted fuel, delays, environmental costs and increased inventory needs. “Road funding has been mismanaged by politicians long enough,” says Roth. “The time has come to unleash the power of the private sector to deliver to road users the innovation, cost savings, quality and choice we take for granted in telecommunications and other services.”

“Free markets work!” wrote Transportation Secretary Mary Peters in her foreword for Street Smart. “The same market forces that took us from Ma Bell’s black, boxy, static rotary dial telephone to today’s era of wide consumer choice can relieve congestion.”

Last year Chicago was paid $1.83 billion for a 99-year lease of its only toll road, the 7.8-mile (12.6-kilometer) Skyway. Last June Indiana leased its only toll road for 75 years, reaping $3.85 billion for the 157-mile highway. And more recently, Pennsylvania has accepted bids to privatize the PA Turnpike. Whatever the path may be, congestion taxing or road privatization, it is without a doubt that transportation funding lies heavily on all officials’ plates.

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