Click for next page ( 80


The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement



Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page 79
Alternative Approaches to Heary Vehicle Taxation Applications Manual- Summary Evaluation 10.0 Summary Evaluation This chapter provides an illustration of how the results of the separate evaluations of tax alternatives for each of the six criteria can be brought together, synthesized, and analyzed in a more integrated manner to assist decision maters. The objective is not only to assist in selecting a good tax alternative for the state or region, but also to assist in refining the heat tax alt~rnative.~ bv analv7.in~ traclenff.c' that might unprove the alternatives. ~ ~ ~ __ c~ ~ ~ ~ ~ ~ _O The example that follows is taken from the last section of Chapter 7 of the Final Report. That section presents a summary of qualitative evaluations of four generic tax alternatives that do not include specific tax rates or schedules. Therefore, it is a simplification of the more specific evaluation Drocess that win be involved In most evaluations of actual tax systems. . . Exhibit 10.1 presents a simplified summary of the evaluations of three of Me heavy vehicle taxation systems presented in the Final Report. The fourth system, a toll system, is very different from the other systems) and our evaluation of it is less readily summarized in a table; instead we present a verbal summary of this system below. Exhibit 10.1 shows a rating of each system's potential for satisfying each of the six evaluation cntena. The ratings are on a scale of one (poor) to five (excellent). The footnotes to the exhibit identify several instances in which the rating in the table does not apply to all variants of the system. It should be emphasized that the ratings reflect our evaluations of the potential for each of the prototypical systems to satisfy the various criteria; they do not measure how well actual tax systems meet these criteria. Additional information relating to all ratings is provided in the discussions of Sections 7.2 Trough 7.7 of the Final Report. These discussions should be reviewed to understand both the reasons for our ratings and the conditions under which they apply. (These discussions also present a number of other observations about the design and administration of We venous taxation systems. Of particular note is our discussion of the advantages of integrating administration of Me separate taxes to the greatest extent practical.) We focused on the use of tolls as a means of charging for the full social costs of highway use. As such, tolls are principally of interest for use in highly congested urban areas rather than as a major component of a statewide or national heavy vehicle taxation system. Furthermore, this interest primarily reflects the ability of tolls to capture the significant spatial and temporal variations in social costs, and only secondarily their ability to vary with vehicle size and weight. Cambridge Systematics, Inc. 79

OCR for page 79
Alternative Approaches to Heady Vehicle Taxation Applications Manual - Summary Evaluation - 0 ~ ._ ._ In O ~ P P ~ cut pi E ~ 0 .O 0 A., ._ Is - Cd X to - ~ O ~ O ~ &, ~ ~ O O ~ ~ O _ _ - U V, to _ ._ ._ X LO ~u) ~c > ~ ~. ~ :~ - w-, b ;^ cn x . o .n ~U. ~Cr. cn x to E~ ~U ~ ' ~ a x ~ . - ~C~ cn u ~ o Ct V) a ' ~ 3 <~s u' _ ~ u, g.~ ~v .cn ~._ ~; 3 ~ ~ 3 ~ > `` b E~ cn ~ 68 D ~ C~ 11 80 Cambridge Systematics, Inc.

OCR for page 79
Alternative Approaches to Heady Vehicle Taxation Applications Manual- Summary Evaluation Exhibit 10.! ~nclicates that our ratings differ slightly for Me two principal variants of the fuel-tax surcharge system (using flat-rate or graduated surcharges) and also for the two principal variants of the weight-distance tax system (using a conventional weight- distance (WD) tax or an axle-configuration weight-distance (AWD) tax). Each of the five tax system variants distinguished in the exhibit does relatively well under some criteria and less well under others. However, the advantages of the graduated fuel-tax surcharge system do not appear to balance its very low feasibility rating.- With this one exception, each of the principal system variants shown in the exhibit appears to- have something to offer. The choice rests primarily on the relative importance placed on the various criteria. The fourth major taxation system evaluated in the Final Report would! use toss as a means of charging for the full social costs of highway use. This system has unique capabilities for reflecting We significant spatial and temporal variations In the fun somal costs of highway use; and, as such, it does far better than any of the other systems in meeting We economic efficiency cr~tenon, at least when electronic toll collection is used. Furthermore, if, as suggested in Section 7.4 of the Final Report, tolls are set to reflect the difference between cost responsibility for use of toll facilities and We fuel taxes and other user charges paid as a result of that use, toll systems can also meet the equity criterion quite well. However, as discussed In Sections 7.3 and 7.6 of the Final Report, He potential for ton avoidance makes it very difficult to design toll systems that achieve their economic efficiency objective in an administratively efficient manner. Also, there is substantial popular opposition to introducing tolls on facilities that currently are free and to charging motorists for the external costs of emissions, as well as more moderate opposition to charging for the external costs of a user's Impact on congestion. The results of our assessment of the several generic tax systems with regard to the six criteria can be related to He states' responses to our survey question regarding their relative ranking of a (somewhat different) list of potential criteria, as reported in Exhibit 2.6. The average ranking of several of the criteria by the states was fairly close, narticulariv the rankings of equity among vehicle classes, evasion, responsiveness to Non, ad~r~nistranve costs, and compliance costs. In contrast, "stability and predict- ability" (elements of adequacy) were ranked much higher than these four criteria, and economic efficiency was ranked much lower. , ,- . - . We do not believe it would be appropriate or useful to attempt to link the results of the survey of the states with our ranking of the tax systems for each of our criteria to attempt to find a winning tax system. The set of criteria used in our evaluation process has evolved over the course of the study and is quite different from the set used in the survey at the start of the study. Also, states were asked to rank the early set of criteria without reference to any specific list of tax alternatives. But most Importantly, the average of the states' ranking may not reflect any Individual state's evaluation. The rankings provided by the states might be quite different, in many cases, depending on which agency, or . . . .. ... . . .. wn~cn unit wlnun an agency prepared tne responses. Also, the responses of individual states to this question frequently were far different from He average responses. We would also expect states' relative assessment of the tradeoffs among the various criteria for actual tax options to be quite different from our qualitative assessment of generic tax ophom. On the other hand, we do not advise that the overall assessment of the results of an evaluation of the alternatives be reduced to a simple ranking (such as the type shown in Cambridge Systematics, Inc. 81

OCR for page 79
Alternative Approaches to Heady Vehicle Taxation Applications Manual - Summary Evaluation Exhibit 7.2) and an unweighted sum of the rankings Men be used to select the '`best" tax system. Most states wiU probably want to give greater weight to some criteria than to others, and these weighhngs should be given consiclerable attention if an overall weighted ranking is desired. We also recommend that states give serious consideration to tradeoffs among the criteria. This can be done by addressing questions such as: how can the ranking of a tax alternative for evasion and avoidance be improved, and at what cost? Can costs (a~ninistrative efficiency) be reduced for an alternative without substantially increasing evasion? Can me feasibility of an otherwise good alternative be unproved through an eclucation effort or further study of specific problems raised by interested groups? A graphic evaluation of tradeoffs among enforcement effort, administrative costs, compliance costs, and evasion is presented in Section 6.5. Finally, the relative assessment of alternative tax options may change over time as technology unproves and as future research provides additional information to aid in implementing more equitable and more efficient tax systems. 82 Cambridge Systemabcs, Inc.

OCR for page 79