Despite recent sales tax hikes in Salt Lake and Utah Counties, some Utah state and local officials are talking about more tax increases for transportation.
In response, other lawmakers are suggesting an alternative to further tax hikes: congestion pricing.
“Congestion pricing pencils as a more efficient user fee than a gas tax in maximizing the use of road infrastructure,” said state Sen. Sheldon Killpack (R-Syracuse), chairman of Utah’s Senate Transportation Committee. “A gas tax simply assesses a cost per gallon and does not make a distinction between the driver on an empty road on a Sunday night and an elective commuter on I-15 [which runs through Provo, Salt Lake City, and other major Utah cities] during morning rush hour, exacerbating congestion.”
Sales Taxes Already Rising
State Rep. Becky Lockhart (R-Provo), whose district is one of the fastest growing in Utah, said, “Utah relies on multiple revenue sources, including user fees and general taxes, to finance road construction and maintenance. Congestion pricing is another tool in the toolbox of funding options.”
However, in a recent forum in which transportation issues were discussed, state Sen. Ed Mayne (D-West Valley) recommended an annual $500 million increase in state sales taxes to fund additional transportation projects. But with the chairman of the Senate transportation committee and other lawmakers open to congestion pricing, and the state already having imposed recent tax hikes to fund transportation projects, more taxes may be a hard sell.
Salt Lake and Utah Counties in November enacted 0.25 percent sales tax hikes, with the additional money to be spent on transportation projects, including preservation of transportation corridors. In Salt Lake County, the total sales tax rate (state and local combined) has risen to 6.85 percent. In Utah County, the new rate is 6.5 percent.
Pricing Influences Demand
Vehicle miles traveled in rush hour in the Salt Lake City area have been growing faster than population, imposing a huge burden on the transportation infrastructure.
Congestion pricing is a form of variable tolling in which the toll increases as congestion increases. For example, a driver would pay more to drive during peak traffic hours but little or nothing to drive during off-peak hours.
Congestion pricing gives commuters a financial incentive to car pool, telecommute, travel earlier or later, live closer to work, or embrace a combination of options. Other taxes such as sales taxes do not provide such incentives.
In most areas with congestion pricing, it is implemented by having drivers mount transponders on the dashboard of their cars. The transponders communicate with the highway’s communication system.
When drivers enter a zone where congestion pricing is in force, their credit cards are billed. Drivers without transponders are identified using license plate numbers and billed.
Multiple Taxes in Place
Opponents of tolling argue that tolls are a tax increase … but toll opponents are themselves proposing massive increases in sales taxes. Toll opponents also argue tolling is a “double tax” because motorists are “already paying at the pump.”
But supporters of congestion pricing note taxpayers are already paying multiple taxes for transportation:
- twice at the pump (federal and state gas taxes);
- three times at the cash register (portions of state, county, and city sales taxes are used for roads);
- twice on property taxes (portions of county and city property taxes are used for roads);
- once when they buy a newly built home (many cities impose impact fees for roads); and
- twice when they register their vehicles (state and some counties).
Mike Jerman ([email protected]) is vice president of the Utah Taxpayers Association.
