Healey, from the most recent debate:
I can tell you that we can do the tax rollback and we can also do the things you want to do Deval.
She can tell us, folks. … If we raise the gas tax and tolls!
A special state commission is expected to call for a 9-cent-agallon increase in the gas tax and reinstatement of tolls that had been eliminated in Western Massachusetts and in West Newton, according to two panel members.
The Transportation Finance Commission, scheduled to act on the proposals Oct. 18, is also likely to lay the groundwork for new tolls on three highways in Western Massachusetts by voting to turn over Interstates 84, 291, and 391 to the Massachusetts Turnpike Authority, which has the power to impose tolls, the two members said.
… The panel’s call for a gas tax increase comes during a heated gubernatorial campaign in which Lieutenant Governor Kerry Healey, the GOP nominee, has urged suspension of the current 21-cent-a-gallon state gas tax.
Kerry Healey: still trying to figure out that 2 – 2 ≠ 3. How about some respect for the iron laws of arithmetic?
I like tolls and gas taxes, because the act of driving has both positive and negative impacts. The positive impacts (economy, pleasure, etc.) show up in the cost analysis. The negative impacts (blight, erosion, air pollution, noise pollution, related health costs, etc) do not.
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So, taxes and tolls force the user to “pay for” those externalities, and weigh them in the cost considerations. The question in my mind becomes: what is the fair amount of gas tax and/or tolls? I have no idear.
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My question, though, is this: what other common acts have significant detrimental externalities? Where else do people make economic decisions in which some of the costs are passed on to “the system”, ie the community?
The generation of electricity. Energy use generally. Water use. Sprawl. Industrial processes that entail air and/or water emissions. Fertilizers.
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Once you get started it’s darned near ubiquitous.
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It’s (very) likely that the gas tax internalizes some of the externalities of driving cars and thus makes the economy more efficient. But, these taxes are not externalities taxes and were not intended as such. Nor do they come close to capturing all of the associated externalities.
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I’d be interested to know where you are going with this. I hate to be a naysayer, but can’t imagine an externalities tax on gasoline being very popular, even if it were made revenue neutral. On the contrary, we reward people who drive a lot with reduced tolls on the pike.
The generation of electricity.
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Fossil fuel, sure. Renewable, generally not.
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Energy use generally.
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Yup.
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Water use.
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Well, it’s a scarce resource in some places, and perhaps is being subsidized… but how does my use of water negatively impact my neighbor, community, etc.?
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Sprawl.
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I think this is a stretch. Sprawl is ugly, but otherwise it doesn’t really directly burden the non-owners. You could make the case of parking lots resulting in water runoff problems, but sprawl itself doesn’t force extra consumption of energy, etc.
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Industrial processes that entail air and/or water emissions. Fertilizers.
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Sure. Polluting is, by definition, a detrimental externality.
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It’s (very) likely that the gas tax internalizes some of the externalities of driving cars and thus makes the economy more efficient.
Yip.
But, these taxes are not externalities taxes and were not intended as such.
Nope and yip. The legislative intent is irrelevant. It’s not a perfect function since not all cars use the same gas per mile driven nor pollute the same amount per mile driven, but it’s a pretty simple approximation.
Nor do they come close to capturing all of the associated externalities.
I suspect that you’re right.
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Where am I going with this? Well, regardless of legislative intent, the gas taxes and road tolls do serve to help bring the actual economic cost in line with the nominal cost, so they do serve as “externality taxes”. They may not be high enough to account for all external costs, but they clearly move the cost function in that direction.
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So, I was thinking about where else taxes can be used to do the same thing. If the tax revenue is used to reduce the user-induced cost in the long run (put driving taxes into a better MBTA, put electricity taxes into green energy generation), it helps reduce the problem and the tax paid in the long run. If the tax revenue goes into the general budget, then it helps to reduce the need for income/property taxes. It becomes more of a “use tax” that can be controlled to some extent by the citizens. Don’t want to pay the $0.05 tax on a can of coke? Don’t buy it, or return the deposit. Want to simply reduce the burden? Buy 2 liter bottles. Same idea.
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So, want to encourage the building of greener power plants? Charge a 2 cent tax per kW/h on dirty (coal, oil, …) a 1 cent tax per kW/h on somewhat-dirty (natural gas, …), and no tax on clean (hydro, solar, wind, biomass, …). Currently tUSA subsidizes all kinds of electricity generation, and as a result, Americans use too much*. Stop the subsidies and then charge for detrimental externalities, and behavior will change in a positive direction. In the case of electricity, the long term steady state results in continuously reducing percentage of electricity being generated by dirty sources, and the revenues of the tax go to zero — which is the goal!
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As for popularity, that’s a different story. I think that increasing the gas tax would be unpopular, but I think “externality taxes” on other items, like electricity generation, might work — especially if they didn’t show up on the actual bill. If the tax was charged to power plants directly, they’d pass the cost on to consumers, but it wouldn’t show on their bill. In the long run, since power generation is a (nearly perfectly) competitive industry, the generation companies would have every incentive to avoid paying the taxes by building greener generation plants.
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Pigovian taxes
Tolls and gas taxes are a double-edged sword. As you point out, they influence behavior in a positive direction, and I like them for this reason, too.
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Of course, if there was more investment in alternatives to driving, that would enhance the effect. To the extent that those revenues are applied to public transportation, alternative energy research, etc., they work. Unfortunately, that’s not happening in Massachusetts right now. Instead, those revenues are replacing revenues that aren’t being collected in some other way.
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And that’s the down side to the gas taxes and tolls; these are a regressive way to derive public revenue, as compared to income taxes (especially progressive income taxes). It’s a cheap, cowardly solution to revenue shortfall.
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Housing patterns force many working people to live farther from their jobs, sometimes in places that will never get public transit. In these cases, there may be no choice but to pay the increased gas taxes/tolls. These folks are penalized disproportionately even beyond the regressive nature of the tax/toll itself, and that’s not even including the two- or threefold increase in the price of gas over the last few years.
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So the taxes and tolls are paid both by the “Screw you, I’ve got enough money to drive my SUV down the Pike whether you like it or not” crowd, and by people who have no choice, and for whom it represents a much larger percentage of income. The elimination of tolls in Western Mass. was probably influenced partly by this, partly by the fact that so much local driving out there requires getting on the Pike, and probably partly by some politics I don’t know about. The Pike tolls — and whether they still need to be collected at all — are a can of worms all by themselves, but they could be eliminated if the actual maintenance costs of the Pike were covered by revenue that was raised appropriately.
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Kerry Healy’s motivation is not to influence better transportation behavior or to invest in alternative energy; it’s strictly to shift the revenue burden down the food chain.
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What Grace Ross has pointed out explicitly in the debates is implicit in Deval Patrick’s approach to state revenues — he knows the relentless tax shifting that has been going on since the Reagan administration — and primarily at the urging of Republicans and cowardly Democrats — has reached the point where it’s painful, unfair, and threatens the underpinnings of any real economic security. Although he knows there’s no appetite for any type of increased taxes, he also knows there’s overwhelming support for stopping the bleeding.
This recommendation from Republican appointees was very deliberately timed to come out a month before the election, and it directly contradicts their candidate’s declared intention to suspend the gas tax (supposedly to provide relief to consumers while leaving Texas/Cheney oil revenues intact).
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Am I missing some hidden strategy here? Is the Republican candidate going to swoop in on a flying chariot borne by angels and announce some unsuspected and more consumer-friendly alternative revenue proposals? Will she simply propose a 5-cent/gallon increase instead of the 9-cent/gallon proposal, and expect the voters will applaud her restraint? Are they trying to force a debate over user taxes that they believe will work to the advantage of their candidate?
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I’m also curious about the involvement in this proposed gas tax and toll increase by an appointed MBTA official. The same official whose mom got slapped by OCPF today for sending out a fundraising appeal that relied heavily on mention of her son. (Appointed state officials cannot engage in fundraising for political candidates, and the letter was apparently seen as an attempt to cirumvent that rule.)
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Did the authors think that the proposals to reduce benefits for MBTA employees would overshadow the news of the proposed taxes and tolls? Or is there a hidden agenda at work in this strangely-timed revenue proposal?
The articles I read today contained this:
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Boston Globe:
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Springfield Republican:
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Problem is, neither article mentions this, from a June 2, 2004 Globe article:
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western part of the state then they need to set up a “progressive toll rate” and target the revenues. Increase the tolls in eastern MA at a greater rate than in western MA and use the money to pay for the Big Dig. Use the revenues from western MA tolls to support infrastructure in W. Mass.
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Otherwise western MA residents will be paying for Boston’s problem.
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If you rasie the gas tax then 100% of that money needs to go to fudning mass transit and alternative energy.
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I have no problem paying my fair share as long as the revenues are fairly generated and sensibly allocated.
To: Info@devalpatrick.com
Sent: Monday, October 09, 2006 11:30 PM
Subject: Opinion on your Opponent’s Integrity
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In a Boston Globe article about proposed increase of gas tax… They had this quote from her on the matter:
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“There won’t be any hike in the gas tax in a Healey administration,” Healey said in an e-mailed statement, which noted that this year, she had proposed a summertime suspension of the gas tax at a time when prices were especially volatile.
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Hope you folks are gonna jump all over this one. Go to the archives, wasn’t even a whole two months ago. She paid for and aired a television ad that clearly stated “If you vote for me, I Will Suspend The Gas Tax”. (essential words) It was really the only clear and specific position she offered in this early advertisement. How can both statements be true?
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Well, if anyone did vote for her, the election was never going to be held in the summer. How can she now be saying that was what she meant? Not even anywhere close to having a chance of being elected and she’s already publicly announcing she has no intention of keeping her first promise? (lame as it was on the surface, regardless) Does she think the public has 2 week attention span?
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Go get her. Keep up the great work team!
Gas taxes and tolls seem like the most fair way to pay for roads. People who drive the most should pay the most for the roads. The benefit from having public roads can be measured better than most public goods. The cost of maintaining a functioning highway system should be included in the cost of driving. If the roads are crumbling, then they need more maintenance. The most fair way to pay for that is with a gas tax.