Automobile and Truck Subsidies

MTS had estimated that the subsid is about $4.00 per gallon. The figure is an approximation. It agrees with similar figures by other organizations. The problem is that it is there has never been an audit by government. But here are some of the costs not paid by motorists:

If you are in California, the CA DOT states that the gas tax only covers 62% of highway costs.

Parking is usually free for motorists, but this is in fact a private subsidy for motorists. Local governments require so many parking spaces per floor area for a business, often one per bedroom for apartments, and often one per table for restaurants. If parking is not free, it is still subsidized if government (usually, city) owned. See How to equalize the parking subsidy and Employee Parking Cashout.

Many roads today are paid for by developers because government requires that. This is another subsidy (not included in the CA DOT figure) because the cost for the buyers of new homes must pay more to cover developer fees. For business developments, the companies need to pay a lower wage rate to attain the level of profit without the road subsidies.  Furthermore, the developers are never required to pay for a light rail line, for example, but always it's roads.

Assessment districts are formed to charge businesses a tax that is used to widen roads or build parking garages. All costumers of these businesses must indirectly pay the tax even if they use transit or a bicycle. 

There are huge city subsidies for autos and trucks.  Almost all cities subsidize roadway costs, and have subsidies for autos and trucks by many city departments.

There are huge air pollution costs that effect health and cause agricultural damage. Both figures are billions of dollars per year. Noise pollution of freeways decreases property values and does psychological damage. Water runoff from roads is very polluted, and this enters our rivers or bays.

What about the 32,000 people killed by cars each year? And those who are injured. This has financial and societal costs.

What about the gulf war(s), which was and is waged to preserve oil supplies to America? The cost of this war should be included.

The largest property taxpayers on California, until about 15 years ago, were the railroads. The competing road/truck/auto system, however, paid no property taxes. This is another unfair subsidy for roads: they don't pay taxes while railroads do pay taxes. Yet, roads use so much more land than railroads. This taxation encourages waste of land.

A recent tax that has been widely implemented in California is a sales tax increase for (usually) freeway construction. This is a very unfair because it is the most regressive tax, and it taxes even those who do not benefit from construction.  It is counter-productive tax because it increases car usage. 

Then there are quality of life issues. For example, the reason most people give for not bicycling (if they are fit and would like to) is that they are afraid of being hit by a car. For transit patrons, this means a long wait for a bus because there are so few riders compared to what it used to be in urban areas. If you look at old film clips, the streetcars came about once a minute.

Then there are the transit subsidies. These are made necessary because of the subsidies to the automobile. Before, streetcars and electric trains received no subsidies and were profitable in urban areas.  Because of large fixed costs of transit, auto subsidies have severe financial consequences for auto's competition, which is public transit.  Once a streetcar or bus is in service, any fares paid go directly to the bottom line, while patrons cost (incrementally) very little per passenger.  This means even more taxpayer outlays are needed for every transit patron that decides to use a subsidized car.

Consider the price of gasoline in Europe, about $5 per gallon at the time it cost $1 here. European countries recognize the costs of the auto and imposes about $4 tax per gallon.

To rectify the problems and injustice listed above, MTS wrote the Free Market for Transportation Plan, A plan to eliminate welfare for automobiles and increase efficiency of all transportation modes. The root cause of difficulties for transit is the lack of a free-market for competing transportation. Returning to fundamental free market principles is the most effective way of helping transit. There are beneficial side effects, including cleaner air, less noise, and a safer city.

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