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Tolls would bring in up to $1.6 billion for highway infrastructure

Montreal, March 3, 2008 – Electronic tolls on all of Quebec’s main highways would bring in up to $1.6 billion per year. An Economic Note published by the Montreal Economic Institute examines four scenarios for instituting charges of this type. Economist Mathieu Laberge, the study’s author, explains that “a return to tolls would be helpful in guaranteeing stable financing for maintenance and rebuilding of the highway network as well as minimizing traffic jams and slowing growth of the government debt.”

The author suggests a “network” approach under which all highways with sufficient traffic volumes would be subject to tolls rather than tolls being applied only to new infrastructure. He says income from tolls should be used exclusively for maintaining and rebuilding infrastructure near where they are collected since any other use would constitute a hidden tax and would undermine the legitimacy of tolls among motorists.

Extending tolls more widely

Tolls disappeared from Quebec in the 1980s but will soon be back with the new Highway 25 bridge and the Highway 30 extension. This provides a good opportunity to assess the feasibility of extending tolls over a larger portion of the highway network.

The following toll scenarios are examined: a) Montreal Island bridges; b) highways in the Montreal area; c) highways around major urban areas; or d) all main highways in Quebec. The last of these is the most attractive because, by affecting most Quebec motorists, it would help reduce implicit subsidies to motorists who do not live near the major urban areas.

A round trip between Montreal and Quebec City would cost about $30. For a suburbanite who crosses a bridge in the morning and evening rush hours, the daily cost would be $4.80, for a yearly total of $1,200. These amounts reflect the value of service received by motorists, with the cost normally hidden in government debt.

Reducing traffic jams on Montreal bridges

The Montreal Island bridges alone would generate revenues of $449 million. This amount is likely to be well in excess of the bridges’ maintenance, depreciation and administration costs, with tolls aimed not only at covering costs but also at reducing traffic jams. Surpluses should be returned to users, for instance in the form of discounts on licence and registration fees paid to the SAAQ. Using surpluses to finance public transit or other government spending would go against the user-pay principle, obliging one category of citizens to assume other people’s transportation costs. Moreover, the pollution issue cannot be invoked in support of this measure since fuel taxes already compensate for motorists’ greenhouse gas emissions.

Public-private partnerships to resist temptation

To share the inherent risk of highway projects with the private sector, to promote innovation and, above all, to prevent the government from being tempted to reach into toll revenues for purposes other than infrastructure maintenance and rebuilding, it would be desirable for the new tolls to be instituted in the form of public-private partnerships. A return to tolls would thereby guarantee that the maintenance deficit accumulated over the years would be dealt with.

The Economic Note titled Bringing back tolls on Quebec highways was prepared by Mathieu Laberge, an economist with the Montreal Economic Institute and holder of a master’s degree in econometrics and international economics from the University of Nottingham.

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Information and interview requests: André Valiquette, Director of Communications, Montreal Economic Institute, Tel.: 514 273-0969 ext. 2225 / Cell: 514 574-0969 / E-mail: avaliquette (@iedm.org)

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