The state of Oregon recently became the latest devotee of a variation of congestion fees. The system falls short, even if the goal is worthy.
It’s a sort of tax on road use more commonly directed at motorists and commercial vehicle drivers who access the central area of a city. Those drivers presumably add to traffic congestion, and increase commuting times, air pollution and greenhouse gas emissions.
This plan has attracted a fair bit of attention, and a version is being studied in various Canadian cities, particularly Metro Vancouver as it struggles to pay for new bridges.
The Oregon plan is for electric vehicles – EVs – and high-fuel-economy vehicles such as hybrids and compact, or ‘smart’, cars to be registered for an alternative tax to the fuel tax. These vehicles pay little or no fuel tax. So this is principally a way to induce those motorists and commercial vehicle operators to help finance road maintenance and construction – as well as bike lanes, paths and public transit – which they would not otherwise directly support.
As most of these vehicles are in and around metropolitan Portland, the state’s largest city, it’s effectively a congestion charge. Commuters generally have shorter drives than those who live and work in more suburban or rural areas.
Devices connected to their vehicles will calculate their mileage and they will pay a per-mile tax.
And if they don’t enrol, they pay a much higher registration fee for their vehicle.
This is a novel variation on toll roads. Tolls or user fees can make sense as a way to directly charge those using a piece of infrastructure. After all, they’re the ones deriving a direct benefit and contributing to the wear on and depreciation of that infrastructure.
However, there are drawbacks.
The fees commercial operators pay would drive up the cost of delivering goods to businesses and consumers, and to institutions such as schools, colleges, hospitals, clinics and government agencies.
Certainly, fuel taxes would be continue to be raised for drivers of conventional vehicles.
And commuters using EVs or low-emission vehicles may receive a net benefit from the plan, but they’re not the only low-emission vehicle drivers affected.
Many commercial operators now use low-emission vehicles or EVs. They will be penalized, whichever way this sort of plan is applied, since they drive far more in a day than commuters typically do – often hundreds of kilometres. Their extra costs will be passed on to other businesses and, ultimately, consumers.
This is a plan that could have merit if the ramifications and consequences are fully explored and costed. But minimizing this effective double taxation is vital.
A congestion charge for vehicles entering the city centre was pioneered in London, England. It was considered a success in lowering traffic levels and pollution; increasing average vehicle speed, including buses, thus reducing commuter times; and raising needed funds for traffic signal and network improvements, road redesign and repair, and public transit improvements.
Other cities, like Stockholm and Singapore, have followed with similar positive results. New York City just adopted a version of the plan – with much opposition – mainly as a way to pay for expensive subway upgrades.
Another approach, hated by motorists, is to reduce or eliminate roadside or metered parking, or establish escalating meter fees.
In European cities, central or historic areas often ban private passenger vehicles. This doesn’t work as well in North America, with its more sprawling, decentralized, and automobile-oriented, designed and structured cities.
There are no perfect solutions to funding road, bridge or tunnel construction, or public transit systems.
Oregon may have created a way to fund future transportation links. But it remains imperfect and inequitable. More work needs to be done to create an equitable way for transportation infrastructure to be funded.
Ian Madsen is a senior policy analyst with the Frontier Centre for Public Policy.