ON THE ECONOMIC AND BUDGETARY EFFECTS OF INVESTMENTS IN SCUTS -THE PORTUGUESE TOLL-FREE HIGHWAYS

Alfredo Pereira and Jorge Andraz

No 37, Working Papers from Department of Economics, College of William and Mary

Abstract: This paper provides empirical evidence on the economic and budgetary effects of the recent investments in toll-free highways in Portugal, the so-called SCUTS, in an effort to bring some clarity to the current policy debate on these highways. This debate is centered on the issue of the financial sustainability of these highways for the public sector and is derived from the fact that their financing through public-private partnerships and shadow tolls involves regular payments from the public budget to the private firms operating them. In this context, the introduction of tolls has been suggested as a mechanism to alleviate possible budgetary pressures. Our first main conclusion is that investments in SCUTS have positive economic effects in all regions of the country. Furthermore, we find that regional spillovers account for about threequarters of the total effects of these investments. A paradigmatic case is Lisbon, a region that captures the greatest share of these effects without any investments having actually occurred in the region itself. Our second main conclusion is that investments in SCUTS do not seem to generate problems of financial sustainability for the public budget. We estimate that for all SCUTS, the equilibrium tax rate, i.e., the rate that would balance the tax revenues induced by these highways and the shadow tolls the government has to pay, is lower than the effective tax rate for the economy. As a corollary and from a policy standpoint our results suggest that the introduction of tolls is questionable from a conceptual perspective due to the magnitude of spillovers and seems to be unnecessary from a financial perspective.

Keywords: road infrastructures; regional spillovers; financial sustainability; SCUTS; Portugal. (search for similar items in EconPapers)
JEL-codes: C32 H54 R53 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2006-08-11, Revised 2010-09-15
New Economics Papers: this item is included in nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://economics.wm.edu/wp/cwm_wp37rev1.pdf (application/pdf)

Related works:
Journal Article: On the economic and budgetary effects of investments in SCUTS: the Portuguese toll-free highways (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:cwm:wpaper:37

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