Bailout

The driveway tax

By Felix Salmon

How to get drivers to help pay for the direct costs and negative externalities they cause? A congestion charge is one obvious way, but it’s expensive and complicated to implement. A driveway tax isn’t quite as elegant, but it’s much simpler, and it seems to be catching on even outside Oregon: it’s just been implemented by Mission, Kansas.

It’s quite simple, in theory: a set of formulas is used to work out how much traffic any given property generates. A single-family home, for example, generates about 9.5 trips per day, and will pay a $72 tax; Target generates 8,500 trips per day, and will pay $64,750. All of which works out to a tax of 2 cents per trip.

There are two problems with this scheme, beyond the entirely predictable pushback it’s getting from people who will end up paying new taxes. A tax of 2 cents per trip isn’t remotely enough to change behavior; and the tax doesn’t actually encourage people to change their behavior in any case: if you sell all your cars and go everywhere by bike or foot or public transport, you still pay the same amount of tax as the five-car family next door.

But anything which moves us away from the costly world of free parking has got to be a good thing, especially if some of the proceeds are used to pay for an express bus service. And even drivers might eventually come around to liking these taxes, if and when they start reducing traffic jams and congestion.

Full post as published by Macroprudential on August 26, 2010 (boomark / email).