Road pricing

From Free net encyclopedia

Road pricing is a generic term for charging for the use of roads using direct methods, charging the users of a specific section of the road network for its use. Examples include traditional methods using toll booths such as turnpikes and toll roads, as well as more modern schemes employing electronic toll collection such as the (2003) London congestion charge, Singapore's Electronic Road Pricing, the Trondheim toll scheme, the Highway 407 bypass of Toronto, Ontario and high-occupancy toll lanes (such as SR-91 in Orange County, California and Interstate 15 in San Diego, California). It is in contrast to indirect charges such as gas taxes, or other types of taxes.

The aims of road pricing are several. The most obvious is financing: raising money to pay back the construction of the road or to build new facilities. This may become more important in the future if gasoline is replaced as a source of fuel for automobiles by hybrid vehicles or alternative fuel vehicles (such as fuel cells) which consume little or no petrol and thus don't generate petrol tax revenue. A second aim is management, by varying charges by time of day (sometimes called congestion pricing or value pricing), users can be discouraged from making trips during the peak times and encouraged to travel in the off-peak, thus balancing flows and reducing congestion loss. In the absence of pricing, individual drivers do not consider the congestion costs they impose on others. Similarly, by varying charges by location (like the London congestion charge), travelers can be dissuaded from driving to a specific place. A third aim is to discourage driving altogether, which is often supported by environmentalists.

A fourth aim, more applicable to rural areas, is to directly charge for any public bad that arises from use of a road, for example, charging more for use of roads that enable poaching, illegal logging, and even road accidents. This aim is shared by some schemes of pay at the pump automobile insurance, which may apply a higher charge near roads with more accidents. It is thought that these measures engage more people in watching and preventing these activities, reporting unsafe vehicles and impaired driving, as they increase road use price under these schemes, making these "everyone's problem".

Another important question is what is done with the revenue. Marginal cost pricing, which economists favor, often raises more money than is needed for the road itself. The revenue can be used to offset gas taxes, to pay for public transport, or to build new infrastructure, among other uses.

1 Criticisms
2 European application
3 See also
4 External links

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Criticisms

Opposition to road pricing, when coming from the broad political left is largely directed at perceptions of fairness. By charging for something that was once "free" it may be seen as unfair. The burden falls more heavily on the poor drivers than the rich. (Though this should be compared with the burden of other financing systems, such as the fuel tax, which is also regressive). New toll roads in a largely free system may be seen as punishing one area when others don't pay for roads. Proponents of pricing would counter the fairness or equity argument by stating that prices create choices, and choices are fair because people are not identical, sometimes people have high values of time (e.g when they are late for an appointment), sometimes they have lower values of time (e.g. when they are enjoying the drive). The proponents would thus suggest that making all drivers pay the same tax to receive the same service isn't fair if people aren't the same. Another argument is that, while road pricing may be unfair to some road users, the alternative, ie. congestion is unfair to all road users, since it wastes everyone's resources.

Conservative critics such as Steven Norris, on the other hand, say that "free" roads produce positive externalities, and that road pricing reduces the overall number of journeys, thus harming business and economic growth.

Motoring interest groups see road pricing as an additional financial burden on already over-taxed car owners. Many are not opposed to road tolls as such, but wish to see them as a replacement for fuel tax rather than an additional charge.

Some groups of libertarian inclination criticize road pricing on the basis of individual rights. They argue that freedom of movement is a fundamental right that should not be infringed through financial barriers, and sometimes compare the practice to highwaymen. Note that most libertarians in general however favour transferral of roads into private ownership, which is likely to result in tolls for individual roads, set on a profit-maximising rather than an economic welfare-maximising basis.

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European application

Facing rising levels of congestion, European governments are giving serious consideration to nationwide road pricing schemes which would exploit the new Galileo satellite positioning system. Every vehicle would have to contain a satellite tracking device which would determine which roads were being driven along, for how far and at what time of day. This information would then be sent to a central computer system.

Schemes for charging trucks (lorries) in Germany by the company Toll Collect, and Austria are already underway. Under the German scheme, which went live on 1st January 2005, lorries pay between €0.09 and €0.14 per kilometre depending on their emission levels and number of axles. The expensive scheme, combining satellite technology with other technologies, suffered numerous delays before implementation, whilst a scheme using much simpler technology in Austria was up and running in 2004. In the UK, the Labour government announced in July 2005 that the proposed UK lorry road user charging scheme would not go ahead.

Extensive studies are being done on introducing a scheme for all UK vehicles, with an aim to implementation at the earliest around 2013. In October 2005 the UK government suggested they explore "piggy-backing" road pricing on private sector technologies, such as pay-as-you-go insurance (also known as Pay As You Drive PAYD), thus avoiding a large-scale public sector procurement exercise. If introduced, this scheme would likely see a charge being levied per kilometre depending on the time of day, the road being driven along, and perhaps the type of vehicle. For example, a large car driving along the western section of the M25 in rush hour would pay a high charge; a small car driving along a rural lane would pay a much lower charge. The very highest charges would be likely in the most congested urban areas. It is expected that rural motorists would benefit the most from such a scheme, perhaps by paying less through road pricing than they do at present through petrol and car taxes, whereas urban motorists would pay much more than they presently do. However, this is highly dependent on whether such a scheme would be designed to be either revenue neutral or congestion neutral. A revenue neutral scheme would replace (at least in part) petrol and vehicle taxes, and would be such that Treasury revenue under the new scheme would equal the revenue from current taxes. A congestion neutral scheme would be designed so that growth in congestion levels would stop as a result of the new charges; the latter scheme would require significantly higher (and increasingly higher) charges than the revenue neutral scheme and so would be unpopular with the UK's 30 million motorists. The carbon emission consequence of moving from fuel duty to a charge per mile has been raised as a concern by some environmentalists, as has any diversionary response from heavily trafficked (and hence more expensive) roads. The UK government announced funding for road pricing research in 7 local areas in November 2005.

It should also be noted that the current government did not originally float the idea of road user pricing for all UK vehicles; the previous Conservative government were also studying the idea in the 1980s, though principally considering tolling to pay for the construction of motorways rather than to control congestion. Even back in the early 1960s, the Smeed Report considered how to implement congestion charging. Any governing party will generally find that congestion is unavoidable without some form of price restraint being applied in the future.

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