The driveway tax

By Felix Salmon
August 26, 2010
just been implemented by Mission, Kansas.

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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.


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It’s actually a driveway =sur=tax, since people (and even some corporations) pay property taxes based on the property they own, which includes the driveway in that space.

Considered that way, it’s a bit more reasonable as incentive–makes the cost of a driveway slightly more than using the space for a garden or play area so that at least you have to decide if you want a car or (extra) food.

Posted by klhoughton | Report as abusive

Wait. 9.5 trips a day? Does that seem excessive to anyone else?

Posted by dragonflyeye | Report as abusive

Your two problems are only problems if the goal is to change behavior. In this case, it seems that the goal is simply to raise revenue for roads (“City officials said they desperately needed the money for deteriorating streets.”), so I’d say behavioral issues don’t come in to play.

Posted by Beer_numbers | Report as abusive

Not all of us live in super dense cities such as NYC. I would gladly use public transport if it existed in any meaningful way in the city I live in. The MSA is well over 1,000,000 and we barely have buses. The city can’t get any support for public transport, though it has tried and could use it.

I would gladly pay this new $0.02 tax (or any tax) if it went towards public transportation infrastructure, but I am sure it would spent elsewhere. So, I take to my car.

Side note: Seems like the American dream of two super sized cars and a massive house is dying. Excess where have you gone?

Posted by david3 | Report as abusive

“Especially if some of the proceeds are used to pay for an express bus service.”

If citizens knew their tax dollars were not wasted on higher Government employee wages and pensions and knew the monies were ear marked for important transportation programs for the future, they should get less negative feedback.

Businesses that helped fund the new routes could also get tax breaks or formula incentives to do so. It’s innovative and greener, and might mean support if done right.

The problem with taxes like this is they tend to hang on and never be lifted.

“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.”

While that is entirely true, the fluctuation of vehicle use (and bull crap that would ensue) would be a burden so of course that isn’t part of the equation. While a toll (while mostly hated) reduces traffic and helps pay for costly beidges and roads, this is a drive toll for everyone.

It means no expensive toll booths and extra employees and it can be rescinded at any time by a new mayor should it be a platform issue.

Plowing, grading, snow removal and road construction are hard sell, so being you can’t make it sexy, make it the ‘t’ word.

I have a good ‘f’ word though…FREE. Once the new public transport is ready, those who use it so many times can get a tax exemption or decrease, discounts on the buses and free rides if they are frequent travelers.

Posted by hsvkitty | Report as abusive

So I live in a small Oregon town where I walk everywhere. I only drive my car a couple of times a week. If this new tax treats all single family homeowners alike, it would have the opposite incentive for someone like me.

This sort of thing really makes me hate economic theory and using it to influence individual behavior.

Posted by lizinashland | Report as abusive

@dragon: 9.5 trips/day (not sure if that’s “round trip” or “one way”) does sound excessive, and mine is certainly less, but factor in visitors, an occasional party or gathering, multiple cars, dropping off and picking up kids from school, etc, and it adds up.

It’s not really a driveway tax, though, as it seems to me that Felix is saying it’s on any property, whether or not it has a driveway (or street parking, for instance). And it certainly isn’t going to lessen congestion in any way I can see.

Posted by Curmudgeon | Report as abusive

@lizinashland, the tax does not actually encourage you to drive, at least not directly. From an individual’s micro-perspective, you cannot change the tax by changing your driving and the tax does not make driving better. But it does have a behavioral aspect from a larger perspective.

Suppose that the tax is used to fund an alternative transportation system as Felix suggests. If the program is successful, then some people will substitute the transportation alternative for driving, reducing the aggregate number of car trips. But that would not reduce the cost of the alternative system; if anything, it would increase. So the tax would have to rise on a per-trip basis to fund the alternative; the more successful the tax, the faster it would rise.

That would make no difference if the elasticity of demand for car trips were the same for all classes of property owners. But suppose some classes (Target) were less elastic than others (single-family homes.) The tax burden would shift toward the less elastic classes. Presumably, Felix would approve, deeming this to be pricing an externality.

Posted by Greycap | Report as abusive

I think the biggest complaint I’d have is in the “trips per day” trick of charging you for going, and charging Target for coming.

Posted by drewbie | Report as abusive

I’d favor monthly / annual metering of odometers. They do it for water and electricity, they can do it for cars. Tax by the mile driven, and deduct the distance from the home to the reading station. Require all licenced cars to be brought in.

Posted by drewbie | Report as abusive

This smacks of consumer inflation

Posted by STORYBURNthere | Report as abusive

Wouldn’t this be solved instantly by an extra gasoline tax that is put into a non-discretionary trust fund for mass transit purposes? Seems a lot more targeted and efficient to me.

Posted by TaxLawyer | Report as abusive

@TaxLawyer, thank you. A gas tax is the fairest way to go. In a lot of places, keeping a driveway or maintaining parking spots actually imposes positive externalities, by keeping parked cars off of city streets.

Metering of odo’s as suggested by drewbie is good too, especially looking a decade or two ahead. In 15 years we will all be be imposing traffic jams on each other with our electric cars and then a gas tax won’t help.

Posted by DanHess | Report as abusive

problem is, it doesn’t incentivise people to drive less.

Fuel tax is the only way to do this. Much better than congestion charging. Cheap to collect and difficult to avoid. It also incentivises more efficient vehicles.

Somehow the obvious political problem with taxing fuel has to be tackled.

Posted by Dafydd | Report as abusive

Although I’m in favor of a higher gas tax generally, I don’t think it’s suitable in this circumstance. If the city is trying to raise money for deteriorating roads, they should levy the tax on the activity that causes the deterioration. That means assessing a fee per mile driven, perhaps adjusted by vehicle weight.

With a gas tax, a Toyota Prius that drives 10,000 miles a year at 50 MPG pays about 1/3 in gas tax compared to a Jeep Wrangler getting 16 MPG, even though they’re arguably doing comparable damage to the road (older Wranglers seem to be about the same weight – 3,000 pounds). A miles-driven fee seems to attack the problem more directly.

Posted by Beer_numbers | Report as abusive

To a first approximation the amount of harm caused to a road is in proportion to the amount of energy ‘lost’ into the road, and the amount of energy lost is in proportion to fuel consumption. This makes sense. City buses do a great deal of harm to road surfaces as compared to cars; they are burning much more energy and disbursing a portion of it into the road.

To put a price on road harm, a gas tax captures this better than other methods. Similarly, that old Wrangler is surely harming the road more than the Prius. A portion of the energy it wastes will be disbursed into the road surface (rougher ride, energy-lossy starts and stops).

Posted by DanHess | Report as abusive

That’s interesting and surprising, to me at least. (I would have guessed that city buses do enormous damage, but for reasons not necessarily related to their fuel consumption.) Do you happen to know of a source that talks about the subject in more detail?


Posted by Beer_numbers | Report as abusive

This is an interesting discussion and is probably why there are few town hall type meetings to get ideas from citizens. Our ideas are best!

It would be nice if higher tax on gas brought about a market force to get smaller and more fficient vehicles built and on the road and the opposite kind off as they have overseas. However, taxing by harm to the environment can result in this:  /article3850617.ece

Taxing gas (additionaly as most already had add on taxes for roads) means that businesses will merely add their extra costs for delivery, shipping and other operating costs on to the consumer. That doesn’t at all capture everyone using the streets, as the consumer pays twice.

Taxing by the odometer is a logistic nightmare but would be fairest of all. The cost of implementing it would probably cut any revenue to a negative result.

Dan Hes said:

“To a first approximation the amount of harm caused to a road is in proportion to the amount of energy ‘lost’ into the road, and the amount of energy lost is in proportion to fuel consumption. This makes sense”

That does make sense. You didn’t offer a solution though. Gas in no way captures their extra burden on raods. The major reason why roads need so much resurfacing is the wear and tear from larger vehicles.

While weight and odometer stations sound like a great answer and would tax those who actually are the burden on the roads, how can you implement and cover losses?

Posted by hsvkitty | Report as abusive

Oooh and here is an interesting find.

“In Oregon, commercial vehicles pay a weight-mile tax instead of the fuel tax that passenger vehicles pay. The weight-mile tax is part of the funding Oregon uses to preserve and maintain roads and bridges.”

Here is what happened when they set up a weigh station to weigh 200 trucks , which have weight and length restrictions…22 were in violation. tail.asp?news_id=69172&news_category_id= 3

Posted by hsvkitty | Report as abusive

As for the relationship between energy use and road damage, part of it is course plain old weight. Trucks and buses need to burn a lot of gas to lug that weight around. Also, cars with powerful engines can wear on roads via hard starts. But I don’t have precise figures.

A petroleum tax seems like the least obtrusive way to handle things, letting the free market figure things out. A gradually rising gas tax has many benefits:
(1) It attacks the petroleum-pollution problem head on
(2) It attacks the import-export imbalance head on
(3) It deals with our reliance and funding of dangerous nations head-on
(4) It helps push us away from dependence on a scarce resource, a transformation we need to make anyway, both in private consumption and in terms of business use
(5) If people really want to drive, they can drive whatever they want, as much as they want. There wouldn’t be hard prohibitions that curtail freedom. Folks will just have to pay plenty for the priviledge.

Petroleum tax really ought to be moved far upstream, for two big reasons:
(1) If you ‘hide the tax’ it may face less resistance than if it is right there at the pump for everyone to feel angry about
(2) It should cover everything, not just driving. In other words, the chemical industry, airline fuel, diesel for farms, and so on. This is for fairness and to really give the economy the transformation it needs.

Posted by DanHess | Report as abusive

I don’t have references either, but I’ve read similar principles to what Dan Hess describes. Trucking is responsible for the majority of the wear-and-tear on the interstates due to the immensely greater pavement loads. Surely everybody has noticed the difference in damage between the left lane (rarely visited by heavy vehicles) and the middle/right lanes?

As for a “driveway tax”, it seems a blatant ploy to charge retail districts for the traffic they bring into town. Surely there are easier ways to address this?

Posted by TFF | Report as abusive

“But anything which moves us away from the costly world of free parking has got to be a good thing”

Hmm. I would not put it this way. The details of this strike me as EXACTLY the kind of BS the plutocracy (and it’s minor appendages in Kansas) have been pulling for years. You can solve the kind of problem you can describe in the most economically efficient method — charge for what is being rationed — or you can try to make the resultant cost “more fair”. But what has been implemented here is neither fair nor efficient.

So why do it this way? Well, cui bono? The beneficiaries are clearly those who drive a lot — which skews rich.

And implementing taxes like this is not cost free. It breeds anger and resentment at “the system” (which is justified, to the extent that “the system” is this nickel-and-diming of people) and a very justified sense that “the system” is not fair. The downsides to the law and government are only put up with to the extent the system is perceived as fair.

Already the combination of plutocracy and citizen rage at taxation (driven substantially by the unfairness of the existing system — everyone can find something egregiously unfair about it) has driven us off an economic cliff.
Further encouraging these sorts of stupid (but, I imagine, thought to be oh so clever — let’s tax the rubes more and that way we’ll tax ourselves less — by the town council) is simply encouraging us to drive off a political cliff.

Posted by name99 | Report as abusive

“But anything which moves us away from the costly world of free parking has got
to be a good thing”

I think that is exactly right. I take it you don’t buy the assumption in the opening sentence: “How to get drivers to help pay for the direct costs and negative externalities they cause?”

I would recommend Donald Shoup’s book: king/dp/1884829988

Posted by ScottofHybla | Report as abusive