Toll Roads and Double Taxation: The Left and Libertarians Converge

It is an illusion that toll roads are a free market way to solve a growing government expense.

Toll roads are appealing to many on the right, because the fees don’t look like taxes; motorists are charged for the voluntary action of driving on a specific road. Toll roads appear to be run by private entities, not the government. Also known as turnpikes, they are becoming an increasingly popular way to raise money to build roads, instead of increasing gas taxes which have traditionally paid for highways. Gas tax revenues only have about one-third the buying power they did a decade ago, insufficient to build new roads or maintain existing ones. There are now 5,244 miles of toll roads in the U.S., operating in 35 states.

It is an illusion that toll roads are a free market way to solve a growing government expense. Toll road contracts are set up as public-private partnerships, which are not the same thing as privatization. Public-private partnerships (PPPs) result in government-sanctioned monopolies granted to one or more favored companies, essentially crony capitalism. It is easy for the government to write specifications for projects so they will only fit select businesses. The PPPs may last from 30 to 100 years, granting an extremely long monopoly without competition. Government continues to oversee the projects, interfering with the private company’s ability to fully maximize revenues. Even libertarians who promote toll roads admit the government still owns the toll roads.

The most expensive highway project in the U.S. was paid for by tolls, and so mismanaged that taxpayers filed a lawsuitagainst the state of Massachusetts over being required to pay tolls for the enormous expense. The Big Dig toll project in Massachusetts resulted in criminal prosecutions, ran 600 percent over cost, and took an extra six years to complete. It will not be fully paid for until the year 2038. Fortunately there were some consequences. The consortium that oversaw the project ended up paying out $407 million in restitution, and several smaller companies agreed to pay a combined sum of approximately $51 million. This experience should have served as a warning.

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