SPEA study: Tolls, gas taxes most ‘tolerable’ road funding sources
Most Americans really don’t want to pay more money to maintain the nation’s highways, according to a study from the Indiana University School of Public and Environmental Affairs. But given a choice, they prefer tolls and fuel taxes to broad-based income or sales taxes as a funding mechanism.
SPEA faculty member Denvil Duncan is the lead author of a study on public attitudes about highway funding.
And that should get the notice of policymakers, the study suggests, because government officials — worried about opposition to “new taxes” tied to road funding — have been turning to general budgets funded by income and sales taxes to make up for lagging fuel taxes.
The study, “Searching for a Tolerable Tax: Public Attitudes Toward Roadway Financing Alternatives,” is published in the journal Public Finance Review. Authors are Denvil Duncan, Venkata Nadella, Ashley Bowers and John D. Graham, all of SPEA, and Stacey Giroux of the IU Center for Survey Research.
The study, based on a survey of a representative sample of 2,087 U.S. adults conducted by SPEA in the summer of 2013, was designed to gauge the level of public support for various ways of raising money to pay for highway maintenance and improvements. Among its findings:
- None of the alternatives had anywhere near majority support, but the strongest support was 34 percent for tolls and 29 percent for a higher gasoline tax rate.
- The lowest support was for increasing income taxes, 13 percent, and sales taxes, 18 percent.
- Many of the respondents who opposed the funding mechanisms said they were “strongly” opposed. Those who favored the ideas were less likely to favor them strongly.
The topic matters because officials have struggled to find ways to fund highways and other infrastructure. Historically, road funding relied on per-gallon gasoline taxes. But that source has shrunk as vehicles have become more efficient. According to the American Society of Civil Engineers, there’s a gap of about $94 billion between what the U.S. spends each year on highways and what it should spend.
The survey also measured support for a mileage user fee, in which motorists would pay according to how many miles they drive. Support for that idea was in the middle at 20.9 percent.
Economists like the idea of mileage user fees because they correspond with the “benefit principle,” which holds that people should pay for government goods and services in proportion to the benefits they receive. That is, the more people drive, the more benefit they receive from having good highways; therefore the more they should pay.
A previous study by the same authors, drawing on the same survey data, found only modest support for using the benefit principle for highway funding. But the current study finds considerably more support for funding sources that are tied to road usage, like tolls and gasoline taxes, than for the alternatives.
“The findings suggest that policy makers at the federal level and some state officials are pursuing policies that enjoy less public support than a mileage user fee,” the authors write.
For example, the Federal Highway Trust Fund is being supplemented by transfers from the general fund, which is funded primarily by income taxes. And some states are turning to sales and income taxes to offset shortages in highway funding.
In Indiana, the legislature approved a plan this year to spend $230 million over two years on roads and bridges by drawing down the state budget surplus and tapping income tax reserves.
Another finding of potential interest to policymakers: 70 percent of respondents thought the federal gasoline tax was higher than the current rate of 18.4 cents per gallon. And those who believed that were, not surprisingly, more likely to oppose an increase in the tax.
The finding suggests that making the public more aware of the actual level of the gasoline tax, possibly by posting the rate on gas pumps, could increase support for raising the tax rate to pay for road improvements, the authors write.
Tags: highway funding, mileage user fee, taxes, tolls
