Tue, Mar 23, 2010 page8

• Making freeway tolls work for all

  • By Bert Lim 林建山
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  The Ministry of Transport and Communications plans to implement a pay-per-kilometer toll system on freeways starting in 2012. One would expect the public to support such a move, as it would make toll collection fairer.

  In fact, however, 55 percent of respondents in a recent public opinion survey published in the Chinese-language China Times said they were opposed to the plan. Many people felt that a ­distance-based freeway toll system would be a tax hike in disguise. It looks as though this may be the next political hot potato to cause ructions in the Cabinet.

  Experience has shown that inertia and habitual resistance to new state and public policies generally arises from considerations and attitudes at the instrumental and operational levels. The public already has doubts about freeway tolls. Decades of paying freeway tolls has left the public feeling that the whole cost of construction must have already been recuperated and maintenance costs more than covered, so why do drivers still have to pay tolls?

  In the majority of developed countries, price discrimination policy for freeway toll collection is not based on the cost of construction or the right to use “economic hardware.” Rather, tolls are seen as a charge for social and economic software, or the price to be paid for the user’s opportunity benefits. The selling point for all high-speed transport services provided by governments, be they railways or freeways, is that those who use them are buying time, safety and speed.

  In essence, high-speed ­transport networks are ­“quasi-public goods” in that they are conditionally available for use by the public. Their main purpose is to function as carriers for inter-city, rather than intra-city, transport and for long-distance trips. That being the case, the most suitable way of sharing the burden of payment for their use is the principle that the user pays.

  For those in Taiwan who are sensitive to the time factor in long-distance transport, the existing extent of freeway construction and the quality of service provided ought to be more than satisfactory. On-the-spot investigation reveals that the main factor reducing the efficiency of freeways and national highways — to the extent that they are often congested — is that more than 54 percent of traffic consists of vehicles making local trips so short that they do not pass through toll plazas.

  These are not the “target trips” that freeways were built to serve. This mass of vehicles making short trips means that freeways are being used for the same purpose as ordinary ­highways. Drivers and passengers making medium-to-long-­distance trips can no longer get the intended value from freeways as they are turned from high-speed to low-speed roads. Thus, freeways no longer perform their original economic and social purpose.

  This worsening situation of short-distance trips outnumbering long-distance ones highlights a number of economic phenomena.

  The first point is that awareness of and sense to time, safety and speed is becoming sharper in Taiwan as society develops and incomes rise and so is the public’s demand for service in these respects. As demand rises but supply remains limited, the charge for using freeways should be raised; they should not be free.

  The second point is that when there is an excessive number of short trips, even to the extent that they outnumber long-­distance ones for which drivers pay tolls, those using the freeways for free greatly reduce the value of the freeway system.

  Third, this situation shows the error of the government’s idea in building freeways that could double as city bypasses. This erroneous policy has led to the serious eroding of the proper use that justified the construction of freeways in the first place.

  Having freeways double as city ring roads while collecting tolls through mainline barriers is unjust, since it robs the poor to pay the rich and exploits the countryside for the benefit of big cities. It uses state resources to benefit those who own vehicles, value time and are highly safety conscious. Those who are not involved in business, and for whom time is not a cost factor, are the victims of this system in that they must share the cost of something from which they do not benefit.

  The best way to correct the present setup’s shortcomings would be to adopting a closed system with metered toll collection. It would make the system fairer and more efficient.

  Urban entry and exit roads should be coordinated and offer a similar quality of service. Most importantly, the system should not cause congestion on nearby ground-level roads. The best way to achieve this would be to assign the operation of tollgates on all freeway entry and exit roads to the city and township government at each locality. Local authorities should be guaranteed a 15 percent to 20 percent share of toll revenue to use for improving their own traffic facilities and services.

  This arrangement would be a winning solution for central government, local authorities and freeway users, and it would provide a source of funding for construction and maintenance of national highways.

  Bert Lim is president of the World Economics Society.

  TRANSLATED BY JULIAN CLEGG
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