Who Should Pay for Infrastructure?

Abstract

Consumers should pay directly for many services furnished by the public sector, particularly such congestible services as roads or water and sewerage provided to easily identifiable users. However, these goods are often funded or partly subsidized through general taxes. Politicians seldom opt for user charges because of a number of public biases and misunderstandings. This article discusses the efficiency of user charges, the misunderstandings and biases those charges face, and how those obstacles may be overcome.

Keywords: infrastructure, user fees, user charges, general taxation, public investment

JEL Classification: H54, H11, H27