Tuesday, May 13, 2008

Taxes, Subsidies, and Road Use

This policy paper was produced by the Environmental Studies Institute of the Church of the Orange Sky.

There's been a lot of grumbling in both the Canadian and American media lately about gas prices and gas taxes. I'm too tired to compile a long list but a simple Google search should suffice to inform you. In the U.S., the Democratic candidates sparred over some ridiculous notion of a few-months-long "gas tax holiday," and for once I agree totally with Obama - this idea is as dumb as a bag of hammers. (Not to mention it's McCain's idea, and Hillary just plagiarized it.) The obvious and fairly reasonable counter-argument, of course, is that many consumers really could use the money, even if it's only twenty or thirty bucks - reasonable, that is, unless you take into account the fact that gas companies really don't have much of an incentive to lower the price of gas as much as the government has lowered the gas tax, especially over a short-term period. Economist and columnist Paul Krugman explains.

In Canada the latest round of muttering from the punditry is in response to a leaked Liberal plan to introduce a federal tax on carbon emissions. Because no one likes new taxes, the wise pundits say while stroking their chins wisely, this is disastrous for the Liberal party. The fact that this tax proposal would actually not be targeting gas at the pump doesn't seem to have dissuaded anyone from wagging their finger at Dion, and to their credit, a few people (e.g. UBC professor Simon Donner) have pointed out the real positives of further measures - like tax inducements - to lower heating and transportation fuel use. This doesn't stop people from grumbling, though, probably because they're generally unhappy with the rising gas prices, and an easy target for their dissatisfaction is the one-third or so of the gas price that governments grab at the pump. Every time a politician mentions "fuel" and "taxes" in the same paragraph, they therefore end up with their face in the crosshairs.

Now, since I don't own a car, I'm not really personally affected if the government were just to raise gas taxes sky high tomorrow. Depending on how many bureaucrats you want to hire to oversee the program, you could even target the taxes more specifically - and realistically this wouldn't be a bad idea - by imposing enormous taxes on urban and suburban areas, but low taxes on rural areas. This would still have to be imposed by either the federal or provincial government, since municipalities can't afford to unilaterally raise taxes and lose competitiveness relative to other cities, but an agreement between all three levels of government would let some or most of the revenue shift to municipal governments - which in turn would help solve another perennial problem in Canadian politics, the under-funding of cities. All of this probably fails an Economics 101-level analysis, of course, because my knowledge of the effect of taxation is not good.

More to the point, though, the argument for all new taxes - as opposed to the McCain-style gas holiday silliness, which actually goes in the opposite direction - is that we need to reduce the amount of driving. This has got caught up in carbon politics, which is good except that a fairly high number of people don't seem to care all that much about carbon emissions. It therefore detracts from the broader problems of pollution, which for some reason we seem to have forgotten in recent years. This despite the fact that, for example, 500 to 1000 deaths are attributed to car pollution in Toronto alone, every year - plus lost work due to other air pollution problems, an enormous amount of time wasted in crowded driving conditions, a horrifically inefficient use of land necessitated by enormous parking lots, and so on.

Governments ponder silly little things like raising the gas tax by a couple of cents per litre or giving people a tax credit for use of public transit. The latter is kind of sort of good, but only applies to people who are basically willing to ride the bus all the time, since you're only eligible if you buy a monthly bus pass, and in virtually all cities, it's not worth buying such a pass unless you're riding the bus at least once or twice every day.

One day we'll develop and successfully introduce some very-low-emission vehicles which people will be happy with. To date, most of these have met with combined opposition from government and industry (even though some of them were developed within the industry, like GM's EV1), and the ZENN vehicle, developed in Canada, is actually being blocked from sale by the Conservative government. On the other hand, electric vehicles aren't really a fantastic solution - a nice one, but it would also mean we'd need a hell of a lot more power generation facilities, and most of those come with environmental problems of their own.

In the meantime, happily, we could consider the fact that there's already a zero-emission vehicle - the bicycle, which, for some inexplicable reason, doesn't have any tax incentives attached. Why the fuck is that? Why are there no tax incentives to ride bikes? They are smaller, in certain conditions at the moment they're actually faster (at 8:30 a.m. I could fairly easily get from my apartment to downtown faster on a bike than on a car), there's no pollution, and so on and so forth. Widespread bicycle riding might lower healthcare costs from obesity and related medical complications. The list goes on.

Perhaps there's simply an assumption that tax credits don't matter on bikes because they're already so cheap, which i suppose is true, although presumably the same argument really should apply to public transit passes, which don't cost all that much either.

People should be eligible for a tax credit on bikes - hypothetically, up to $500 on road bike purchases and $100 on mountain bike purchases, no more than once every three years. The difference in credits is because mountain bikes are often purchased for recreation purposes irrelevant to the current environmental plan, and less useful in the city anyways. I'd tell you to ask a bike messenger to confirm this, but if you took their characteristically insane advice, you'd probably end up touring the city on a fixed-gear with no brakes and no helmet, which would probably not be a net benefit to the average cyclist.

Helmets should be tax deductible, at least in those jurisdictions which require them by law, and so should money spent on parts and repairs for bikes, which, despite being fairly uncomplicated machines, do require regular maintenance for urban use. New tires and tubes in particular. Combine the credits and deductions and surely there's at least enough potential money to begin to compete with a minor and fairly useless adjustment to gas taxes, unless of course you waste gas driving an SUV or indulge in some comparable inanity.

Even if this actually had any impact, I have to admit I'm not sure whether society would benefit financially from a major shift towards more bike use. Lower congestion, lower pollution, and reduced wear and tear on public roads are beneficial. On the other hand, cyclists are about a dozen times more likely to get killed than car drivers, at least under current conditions, and even in collisions which would be minor in a car, cyclists are going to have real injuries. There are probably a list of other complications people could come up with too.

Suggestions that we need more bicycles in inner-city areas usually rouses great opposition from drivers, especially SUV drivers, who are not only far too often blissfully unaware that bikes are legally classified as vehicles but routinely complain about cyclists ignoring road laws.

Now, that's true, although 90% of the complaints on the subject are sheer hypocrisy. After all, how many car drivers rigidly follow every single road law, all the time? Including speed limits? Basically almost every motorist is willing to openly break road safetly laws, for their own convenience, under certain conditions. In that sense everyone has something in common.

Plus, anyone who's ridden a bike in urban areas for at least 50 hours or so, can probably give you at least a short list of times their lives have been endangered by criminally irresponsible idiot motorists performing blatantly illegal maneuvers - turning left into a bike, cutting in front of bikes to turn right, opening a car door in front of a bike, and various other forms of stupidity, which together account for a large percentage of collisions despite all the supposed recklessness of urban cyclists. The ludicrously high rate of people who can't be bothered to check for a cyclist before opening a car door leads to the seemingly ridiculously counter-intuitive fact that it's probably safer to ride straight down the middle of the road than along the side next to a line of parked vehicles (this is another common habit of the insane bike messengers).

Ultimately, putting more cyclists on the road isn't going to do a lot about those problems - drivers are still going to despise cyclists for breaking road laws at their own risk and getting away with things drivers couldn't, and cyclists are still going to despise drivers for breaking road laws at the cyclist's risk and endangering others' lives in the process.

At the end of the day, the relative cost of automobile and bicycle use means that tax credits are going to be a pretty minor point, but still...