When Wendell Cox claims that "intercity roads are self-financing", this is both untrue on its face and disingenuous with respect to public transit such as LRT.
By Nicholas Kevlahan
Published June 10, 2009
this article has been updated
Last week, the Agenda on TVO ran an interesting debate on whether high speed rail should be built in Canada, in particular on the Windsor-Quebec City corridor.
One of the guests, Wendell Cox is a high profile critic of high speed rail (as well as every other form of public transit).
His opposition is founded in a right wing distrust of 'government planning' and public transit: people traveling together is seen as inherently bad since it restricts individual freedom with respect to origin, destination, timing, and so on.
I remember that Margaret Thatcher broke with tradition by refusing to travel by train on principle for similar reasons!
Of course, Cox wasn't clear on his real motivation, and attacked high speed rail (as he attacks LRT) on the basis of efficiency and cost, but his opposition is really based on a dislike of big government infrastructure programs intended to change people's behaviour.
An obvious objection is that massive government planned, built and operated road systems are the biggest example of the sort of state-sponsored social planning he claims to oppose!
However, he never addresses the obvious point that his own arguments would suggest all roads should be privatized, tolled, and run by competing companies. He brushes all this aside by claiming that "intercity roads are self-financing via fuel taxes".
This is both untrue on its face and disingenuous with respect to his opposition to public transit such as LRT.
A fair and full accounting of construction and operating costs shows that fuel tax only contributes a small portion of total costs.
David Collenette, also a guest on the program, emphasized that fuel taxes do not cover road costs in response to Cox's comment, but neither one backed up their claims.
In fact, Transport Canada did a study [PDF link] in 2005, which found that the annual total financial costs of the road system in Canada are $16.5 to $25.8 billion, while annual revenues from fuel taxes and fees at the federal and provincial levels were only $12.8 billion, i.e. a shortfall of between $3.7 and $13 billion per year.
The Transport Canada study then tried to include every conceivable source of revenue associated with roads and motorists: traffic fines, lot levies (development charges imposed by municipalities), special assessments, parking charges, building prices (share of road revenues embedded in building prices) and find total road revenues of between $15.1 and $17.2 billion.
Thus, even taking into account revenue sources, such as parking charges and traffic fines, that shouldn't really be thought of as user fees for roads, there is still an annual shortfall of between $1.4 and $8.6 billion per year.
Far from motorists 'subsidizing the entire government' as many people think, motorists are being subsidized from general tax revenue to the tune of billions of dollars per year!
Cox is also being disingenuous since he is also against public transit such as light rail transit, which must compete with motorists on local roads that are 100 percent subsidized by taxpayers.
Cox is also avoiding the basic issue, which is government planning and ownership. To get a true idea of a 'free market' cost, one only has to look at the per km charge on the 407 or French autoroutes.
The 407 charges about 20 cents per km, whereas all fuel taxes would only be about 3.5 cents per km (based on a car that gets 10 L/100km with gas at $1 per litre and 35 percent of gas cost being taxes). We are far from paying market costs for our roads.
Cox is also against 'smart planning' and is in favour of sprawl, again on the idea that one shouldn't infringe personal freedom - although, again, he conveniently ignores all the government subsidies and planning that encourage this behaviour.
Update: The link to the Transport Canada study was updated.
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