Reducing the toll on taxpayers

Japan’s expressway tolls — long criticized as being much higher than in other advanced economies — in recent years have been discounted with the support of government subsidies that fluctuated with the changes in administration and the government’s fiscal condition.

As the discounts are set to be scaled back in April when the state budget allocation for toll reduction dries up, the current scheme that heavily relies on taxpayer money should be reviewed and replaced with a more sustainable one.

After the former Japan Public Highway Corp. was privatized into three expressway operators (West, Central and East Nippon Expressway companies) and three other expressway public corporations each became private operators in October 2005, the government began using public funds to subsidize toll discounts, initially as part of a stimulus package to fend off the impact of global recession following the 2008 Lehman Brothers shock. The then Liberal Democratic Party-led administration introduced in March 2009 a discount that kept the maximum toll at ¥1,000 on weekends and national holidays.

The Democratic Party of Japan, which came to power in September the same year, advocated making most of the nation’s expressways gradually toll-free in its campaign pledge. In the face of fiscal constraints, the DPJ-led government began “experimenting” with toll-free services on some routes in rural areas, but it suspended them after the March 2011 Great East Japan Earthquake necessitated massive reconstruction spending. The ¥1,000 limit on weekend/holiday tolls was also scrapped in 2011.

The cost of retaining the discounts has been shared by the government and expressway operators. For the current fiscal year, the government is shouldering ¥400 billion of the ¥900 billion cost for the West, Central and East Nippon Expressway companies. In March 2014, this scheme will use up the ¥3 trillion set aside in the 2008 stimulus package for toll discounts.

In November the three expressway operators announced that, beginning next April, the weekday 30 percent discount for drivers using the electronic toll collection system would be abolished and the weekend/holiday discounts would be lowered from the current 50 percent to 30 percent — due to the end of government subsidies.

But the government plans to provide ¥60 billion to extend the 50 percent weekend/holiday discount through June, in an attempt to ease the impact of the consumption tax hike from April on Golden Week holiday tourism. But such steps should be limited to a minimum temporary measure.

While it would be welcome if reduced tolls encouraged more drivers to use expressways, which were built at huge expense, using massive subsidies of taxpayer money to achieve that is not sustainable. Toll reductions should essentially come from greater efficiency on the part of expressway operators; discounts should be offered where maximum effects can be expected.

Expressway operators face the massive cost of renovating aging infrastructures such as bridges, tunnels and elevated sections — a problem highlighted by the fatal collapse of a section of the Sasago Tunnel on the Chuo Expressway just a year ago.

An expert panel at the transport ministry has recommended that expressway toll collection — which under the 2005 privatization law is to end in 2050 after the tolls pay off the debts taken over from the former JPHC and three other public corporations — be continued for another 10 to 15 years to cover the expenses for expressway repair and renovation estimated to cost trillions of yen.

Expressway tolls should be based on a long-term policy that takes into account these challenges, rather than depend on government subsidies that are subject to political caprice.

  • http://getironic.blogspot.com/ getironic

    “Japan’s expressway tolls…have been discounted with the support of government subsidies…”

    Aren’t we already paying taxes for these roads? Why do we have to pay twice?

    The answer is not primarily about paying for the roads, the answer is that if we didn’t, then two things would happen:

    1. The price of train and bus tickets would fall dramatically, because inter-prefectural travel by car would become the preferred method of travel. Draw your own conclusions about what the consequences of that would be, and who would be scrambling to maintain their power.

    2. Car ownership would increase significantly, in a country that already has a scarcity of road space and parking spaces…the demand for petrol would go up. Again, draw your own conclusions.

    Whatever reason the tolls were initially put into place for, the primary reason they continue is social engineering — to maintain a travel monopoly so that no matter where you choose to go, you pay out the nose and the state-corporate hybrid gets your money, one way or another.

    The only way to break this collusion of power is to fully privatize the transportation industry, including highways. When the different forms of transportation are actually in competition with each other, instead of in happy collusion (pretend competition) with each other, prices will be driven down.

    It’s no wonder nothing has changed for so long when the only counterargument is what you see in this editorial: the “make statism work somehow”, hyper-vague, suggestion of “let’s have long-term policies”.

    Even if it was as simple as that, you’d have to have a population that was willing to stay the course on a government that implements that policy: which they won’t because all such policies continue to make problems, leading to voter unrest, leading more elections.

    Different heads, same ideas, same results.

    Well, there’s always the next election, whether in December 2016, or sooner. At the rate the populace is being robbed by Abe’s inflation of the yen, I expect them to wisen up as it continues to manifest itself as only two tangible results: getting the rich richer, and increasing the prices of daily goods, making life harder for the poor and the vanishing middle class.

    So, I’d venture that an election is coming sooner rather than later. So much for any long-term planning. One day maybe we will understand that only the people can do that, themselves.