Would Eliminating Road Subsidies Encourage Transit Use?

Barro, writing in City Journal, points out the sometimes conflicting arguments regarding transit subsidies versus those of road subsidies, finding that roads require a much lower subsidy than transit, at ~8% and ~41-55%, respectively. "More important is that the 41-to-55-percent figure is misleading: it refers only to the cost of roads, not to the total cost of driving," says Barro, "[t]hat total cost includes not only public spending on roads but also a host of private purchases-of cars themselves, maintenance, gas, and insurance."

"All told, then, $1.08 trillion was spent on road travel, with government subsidies providing only $83 billion of the total. That's a subsidy of less than 8 percent," writes Barro, who argues against the commonly-held concept that eliminating these subsidies will encourage greater transit use. "An end to road subsidies would raise gasoline prices by about 50 to 60 cents a gallon. Over the last decade, fuel prices rose much more sharply than that, which led to a modest reduction in vehicle-miles traveled, but there hasn't been any sea change in our transportation practices."

Instead, he argues for a drastic change in the way Americans approach planning and zoning. Leveraging the fact that properties near transit increase property values and, therefore, property taxes, Barro believes "[c]ities should allow dense development, collect the property taxes that are generated, and use them to finance transit."