Kill the Gas Tax with Privatized Roads

But what about the roads?

This is a common refrain I often hear from folks who believe that in the absence of government, interstate travel would come to a screeching halt. After all, if taxpayers didn’t foot the bill for road construction and maintenance, who would?

I’ve long been an advocate of privatization. There’s little doubt that the current United States transportation system is significantly flawed, particularly when it comes to our roads and highways.

In its most recent infrastructure report, here’s what the American Society of Civil Engineers wrote about the nation’s roads:

 …forty-two percent of America’s major urban highways remain congested, costing the economy an estimated $101 billion in wasted time and fuel annually. While the conditions have improved in the near term, and federal, state, and local capital investments increased to $91 billion annually, that level of investment is insufficient and still projected to result in a decline in conditions and performance in the long term. Currently, the Federal Highway Administration estimates that $170 billion in capital investment would be needed on an annual basis to significantly improve conditions and performance.

Interestingly, while the Federal Highway Administration claims we need to invest $170 billion annually to improve conditions and performance, the trough of tax dollars from which the government must pilfer to cover these investments isn’t quite as full as it once was.

The truth is, over the past 10 years, spending from the Highway Trust Fund (HTF) has exceeded its revenues. This is due to the inconvenient truth that the gasoline tax that funds the HTF hasn’t kept up with inflation.

It also doesn’t help that newer vehicles are simply delivering better fuel economies compared to what we were seeing just five years ago. They need less fuel, and that means less lucre for the HTF.

“Solutions”

In an effort to sniff out more funding for the nation’s roads and highways, lawmakers are now searching frantically for new ideas.

Some have suggested a VMT — a vehicle miles travel program that enables drivers to pay a fee based on how many miles they travel. In theory, this sounds fair. The only problem is that collections would go back into an ineffective government-run system with a long history of poor planning and waste.

Another so-called solution is to charge drivers of fuel-efficient vehicles an annual fee to make up for the shortfall in tax collections. The state of Wisconsin is the latest to give this a whirl.

As reported in Greentech Media:

Faced with declining revenues, Wisconsin could become the next state to impose a fee on fuel-efficient vehicles, joining five others across the country.

The $50 annual charge that would be applied to both electric vehicles (EVs) and hybrids is expected to raise $4 million by 2017, as part of $751 million in new fees and tax increases proposed this month by the Wisconsin Department of Transportation.

The new fee on EVs and hybrids is designed “to ensure these owners continue to pay their fair share of the operating costs of our infrastructure,” Wisconsin DOT Secretary Mark Gottlieb wrote in a letter to Governor Scott Walker.

Washington, Colorado, Nebraska, Virginia and North Carolina already charge EV drivers special fees to make up for revenue they don’t pay in gas taxes. If the budget is approved as-is, Wisconsin would become the only state to place a fee on hybrid vehicles.

Of course, this begs the question: What’s next?

What about small cars that just get good gas mileage? There are a number of internal combustion engine vehicles that deliver better fuel economy than certain hybrids. Will those be charged a fee?

What about motorcycles and scooters? Those get terrific gas mileage. The Honda CMX250C Rebel will get you more than 80 mpg, and for city dwellers, Genuine’s Stella scooter gets more than 140 mpg.

Political Hustlers and Con Men

I’m actually skeptical of Wisconsin’s agenda, as it stinks of politics and retribution for all those pesky treehuggers who drive around so smug in their 50-mpg Priuses. But my personal skepticisms aside, there’s one striking similarity we keep seeing when solutions to this problem appear…

All of these “solutions” involve the state stealing more of your money to maintain roads that, in many cases, are built as political favors.

Is it any surprise that Gov. Walker landed three-quarters of a million dollars in campaign contributions from road builders? Is it any surprise that state legislators landed more than a quarter of a million dollars from road builders?

The construction and maintenance of our roads and highways is undertaken by a system that is run by political hustlers and con men.

From failing bridges to crumbling roads, it is clear the government is ill suited for such a huge responsibility. There’s no incentive for the government to do the right thing. The state gets tax revenue, spends it like a drunken rapper on a video shoot, and then asks for more money to “fix” the roads.

If the roads were built and maintained properly, this wouldn’t necessarily be such a big issue. But again, there’s no real incentive to do that.

Private industry, on the other hand, does have an incentive: profits!

Replacing the government with private industry would encourage real, profit-driven growth instead of debt-driven growth. There would also be no dangers of eminent domain, and external costs, including noise and air pollution, have a better chance at being internalized.

After all, it’s much easier to hold a private business accountable for externalities than it is to hold the government accountable.

Healthy competition would provide drivers with more options and better service, too, and all passenger vehicles would be on equal footing. Whether you’re driving an 8-mpg Hummer or a Tesla Model S, there are no special privileges or unfair penalties.

I realize there are a lot of folks who simply can’t wrap their heads around this idea. So let me leave you with this quote from writer James Miller, who explained this concept with stunning accuracy…

The reactionary disregard of privatized roads is a response conditioned by decades of state-controlled highways. Because the political class, whether at the state, local, or federal level, have had their grubby mitts on road maintenance for seemingly all of the industrialized era, it is hard for the public to imagine how the market and strict protections of private property would really provide for better, more efficient road organization. With today’s major advancements in technology, it isn’t the spontaneous order of the market that holds back the road and highway privatization; it is the government’s monopoly.

To a new way of life and a new generation of wealth…

Jeff Siegel

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Jeff is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor’s page.

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