Successful Olympic Bid Reconfirms Necessity of Tolled Highways

The successful 2010 Olympic bid presents an extraordinary opportunity for Vancouver, Whistler, and the Province of British Columbia. But if we are to reap the benefits that hosting the Olympic Games can offer, it is critical that all those involved in Olympic development manage resources and control costs ruthlessly. And out of fundamental fairness, the financial burden of the Olympic development should be borne by those who are most likely to benefit. Reducing the burden to average British Columbian families, who through their tax dollars will foot any cost overruns, must be the first priority.

Mega transportation projects are in the works to support the 2010 games, such as upgrades to the Sea-to-Sky highway and maintenance needs on the Coquihalla highway remain to be addressed. Whether it’s the original building costs, or the ongoing maintenance and upgrade costs, or the costs of emergency services, mobility has to be paid for on a continuing basis. But there are different funding options available, of differing benefits. The two main choices are to fund mobility through broad-based taxes, or to utilize road tolls. We must decide which approach to use and then use it properly.

Which is the better approach to funding the transportation infrastructure necessary to host a successful Olympics? We suggest that tax-deductible tolls administered by private entities are superior to tax-based approaches for several reasons.

First, if you want to waste money, tax-based financing of transportation is one of the best ways to do it. With no concerns for profitability or cost-containment, government transportation agencies have no incentives to bring projects in on time, or on-budget. Projects such as the Alex Fraser Bridge, the upgrade to Lion’s Gate Bridge and the Coquihalla highway all came in over budget. By comparison, the 407 Express Toll Road (ETR), a highway that extends 108 Km east-west, just north of Toronto was developed as a public-private partnership between Canadian Highways International Corporation (CHIC) and the Government of Ontario. There was a guaranteed construction price tag of $930 million, which was met according to budget and on schedule. The road was then sold to a private company for $3.1 billion dollars, earning a windfall for the taxpayers in Ontario.

Second, if you want to see a regressive tax, look at fuel taxes. Taxes on gasoline are inherently inequitable, taking money from people who never use certain roads, and subsidizing other people who do. Often, gasoline-tax funding means that lower-income people pay to fund mobility for higher-income people. Why should people who drive primarily to commute to work in the Lower Mainland pay to send skiers to Whistler? Why should a motorist who can’t afford a new car with better mileage (and who will therefore pay more gasoline tax) subsidize someone who can afford a newer, higher-mileage car? And why should automobile drivers pay to subsidize the mobility of for-profit trucking firms who use and impose most of the wear our highways?

Third, fuel-tax based financing of highways undercuts efforts to reduce air pollution, and results in over-use of newly constructed capacity. Studies suggest that controlling air pollution as well as roadway degradation is best done by the use of proper economic incentives, rather than through command-and-control regulations. So the best way to make sure that roadways aren’t degraded rapidly by excess truck traffic is to establish a maintenance program funded by tolls paid by trucks in proportion to their impact on the roadway. By the same token, the best way to insure that motorists incorporate environmental concerns into their mobility decisions is to make sure that the cost of driving includes the cost of repairing any demonstrable environmental damage their mobility might cause. That’s not easily done if the transportation system provides motorists with seemingly unlimited highway mobility paid for obliquely via taxes, and sometimes by a third party altogether.

It’s understandable that many people oppose toll-roads. They’ve been mislead into thinking that there’s a transportation free lunch, and they fear that government will add on both tolls and taxes, double-charging them for every mile driven. That is something to be avoided at all costs, which is why a tax-deductible toll system, where there’s no net increase in money taken from consumers is critical. But it can be done, and the Liberal government should stick to its determination to find toll-based, public-private partnership approaches to providing the infrastructure that the 2010 Olympic Games will need. Privately administered, tax-deductible toll road approaches can give motorists the mobility they need, fairly apportion the costs according to use, create better incentives for environmental protection, and reduce wasteful governmental spending.