Road Pricing and Taxation

One of the major criticisms(1) of road user charging projects is that it affects all drivers at an equal rate, regardless of their income. As a way to avoid being accused of squeezing motorists and taxing the poor off the roads, the Government has spoken of making a national scheme ‘revenue neutral’ - in other words, reducing exisiting fuel duty and road tax so that the overall take from the roads is the same. This means that those who drive more and in more congested areas(2) would subsidise other drivers.

One problem then is that by lowering or removing the existing fuel tax, there is far less incentive to drive cleaner and more fuel-efficient cars, reducing demand for such cars and setting back their development and introduction. Fuel tax is the charge most closely related to emissions produced - effectively a pollution tax - and it should be retained(3).

The 'revenue neutral' approach must be rejected, because it means that the system cannot reflect the true costs of motoring(4), as laid out on page 5. It would be forever tied to the amount raised before its introduction. A revenue-raising charging regime would better allow the issue of equity to be addressed.

Social equity in transport policy is a controversial topic. An equal cost for use of roads represents a larger proportion of income for a low-income family. But it clearly isn’t practical to means-test a congestion charge. Any system for York should follow the London model, in which revenue raised is targetted to public transport infrastructure works that will benefit lower-income households(5) - including the elderly and disabled - more. It is, however, important to note that motorists being charged equally also benefit equally from more freely-flowing roads and quicker journeys.

One final thought - Compensation

If motorists are going to pay for the service of more reliable journeys, it is only fair to expect that the service is supplied. When paying to use any other form of transport, travellers can be compensated for unacceptable delays in their journey. Any agency(6) raising revenue from road user charging must establish such a minimum level of service for its motorist customers.

Notes and References

See for example, the article by Hassan Mahamdallie for Socialist Worker. It's also cited as the second Reason why idea [sic] is daft by National Alliance Against Tolls.

Compared to the present situation. Those who drive more tend to be better off - see Transport Trends 2007 edition (DfT, 2007) Section 4- Travel by household income group. It's also worth mentioning that the most fuel-inefficient cars also tend to belong to higher-income groups, so the amount that they pay through fuel duty will lessen if a revenue-neutral approach is followed.

Under an ANPR-based congestion charge, however, it will cost less to run one car than two cars half the distance. This is broadly progressive, and in line with the fact that the ecological impact of building a car actually outweighs the damage in running it - see the article "Dirty from Cradle to Grave" by John Whitelegg.

This view is shared by Friends of the Earth - see their briefing Oil prices, fuel tax and climate change (FoE, 2004).

It is important to note that the costs paid by motorists are actually falling. For all the complaints of the motorists' lobby that they are being taxed off the roads, it has been repeatedly proven that the relative cost of motoring has actually decreased in the 1980s - cited for instance by the European Environment Agency and the Commission for Integrated Transport.

This very complex topic is the centre of many academic studies. A good overview is provided in "Evaluating Transport Equity" (Todd Litman, in World Transport Policy and Practice, Vol. 8, No.2). Although hard to draw any universal conclusions, one conclusion is that increasing cycling, walking and public transport is normally more progressive than protecting the status quo of car-dominance.

This is similar to the concept of a 'road fund' which was abandoned in the UK in 1937. However the paper Road Taxes, Road User Charges and Earmarking (Santos and Newbery, 1999) argues that such a system for the hypothecation of road taxes and congestion charging would be "feasible and desirable".

It may be worth saying that the 'agency' involved may well not be the Local Authority. To avoid public-sector borrowing rules, and the poor record of public-sector procurement, it would probably be better if the scheme was managed by a non-governmental, non-profit-making organisation, licensed either by the local authority or by the Transport Commissioner.

The lack of any form of guarantee is one respect in which many existing schemes are highly inequitable. Such a contract should guarantee only against failure to control congestion: the agency should not be penalised for delays caused by unforseeable circumstances.