Tim Worstall

Transport Taxation

Rod Eddington’s report suggests road pricing:

Sir Rod Eddington gave an unequivocal endorsement for
the principle of pay-as-you-drive road pricing, with charges of up to
£1.28 a mile on the busiest roads at the height of the rush hour.

"For me in the end, road pricing is an economic no-brainer," the former British Airways chief executive said.

It is, in principal, indeed a no brainer. We have a scarce resource, road space at peak times, and people should be charged the full costs of their use of it. That’s the only way it can be allocated efficiently. The problems, as ever, will come in how they actually implement the system. Will they, in fact, lower other taxes to make it revenue neutral? How to deal with the regressiveness of such taxation (raising the personal allowance would be a favourite)?

The cost could be even higher for owners of "Chelsea Tractors" and
other gas-guzzlers with the worst environmental credentials, with Sir
Rod supporting the principle of varying pricing charges according to
CO2 emissions.

Again, in principle, fine. If fuel duties are going to be lowered to offset then fine. However, as we already know the CO2 costs of a litre of petrol being used are about 10 pence. As fuel duty is already 50 pence per litre, it seems likely that they will continue to grossly over-tax CO2 emissions.

It was not only motorists who could face higher bills. Sir Rod also
advocated that air passengers pay more, because of the environmental
cost of aviation. This could add £12 to a short-haul flight and around
10 per cent to the cost of a longer journey.

Again, fair enough. My own (very, very, back of the envelope) calculations suggested that £10 on a return  flight (short haul) would be about right if we used the Stern Review numbers for CO2 emissions. So we’re in the right ball park at least. But which taxes will the cut alongside this? Perhaps the best part of such taxation is that it will leave the anti-aviation campaigners with nothing left to say. If travellers are paying the full costs of their actions then there is no point in campaigning against flying further, is there?

In

7 responses

  1. JT Avatar
    JT

    Surely for a proper market to develop, entrepreneurs should be allowed to expand the road space available to meet excess demand?

    Reply
  2. MarkS Avatar
    MarkS

    Yes… fine in principle but we all now that the taxes won’t be revenue neutral. Road pricing will be introduced but the tax disc and high petrol duty will remain. Very few governments ever really cut taxes. I think the Thatcher government was the only one in living memory that cut taxes. The fact is, governments become addicted to the drug of taxation and are able to buy votes with it by expanding the public sector.

    Reply
  3. Kit Avatar
    Kit

    I agree with JT. Can you imagine Tesco’s rationing its bread if demand was high? It would bake more bread.
    Have road pricing but not a state sponsored nationwide system – it will only end in tears.
    Sell the roads and allow new roads to be built – problem solved.

    Reply
  4. JuliaM Avatar
    JuliaM

    You only have to look at bridge & tunnel schemes where tolls are set up just ‘to pay for the building of them’.
    How many then scrap tolls once the costs are paid? This will happen with new road taxes too….

    Reply
  5. Gorsefox Avatar
    Gorsefox

    Another stealth tax… nothing more. Most people who use the roads in rush hour have no choice (they surely wouldn’t use them out of choice).
    Gorse Fox foresees that he will charge HMG nearly £360 per week to re-imburse this tax (as he is travelling on their behalf)… and if they insist he uses the train he will charge for his time… after all that would mean the equaivalent of a full working day out of his time.
    The lunatics are running the asylum.

    Reply
  6. pogo Avatar
    pogo

    Road pricing is an absurd idea that would only work if drivers were sitting in traffic jams for the sheer pleasure of it, rather than being stuck there because they have to get to work somehow!
    And if you could restructure society sufficiently to enable working hours to be spread and thus enable drivers to travel at cheaper times there’d be no need for the charge.
    Eddington, like Stern, was merely doing what he was told to do by his paymasters at the Treasury – “give us another platform for raising more tax”. The likelyhood that this absurd idea would be “revenue neutral” is about as likely as porcine aviation.

    Reply
  7. Watching Them, Watching Us Avatar
    Watching Them, Watching Us

    The Eddington study does not seem to mention words like “privacy” recommending the building of an unprecedented (either in the UK or in any other country) national mass surveillance infrastructure, using some as yet undetermined mixture of ANPR surveillance cameras, roadside microwave beacons, GPS satellite positioning, mobile phone and “On Board Unit” technology.
    This will, according to the 2004 Feasibility Study guesstimates cited by the Eddington report, cost somewhere between £10 billion and £62 billion in set up costs, and £2 billion to £5 billion a year to run.
    This is like the Home Office’s ill-defined National Identity Register / ID Card scheme, only at least 10 times more expensive.
    Why is there no mention of the Lorry Road User Charge (LRUC) scheme, which would have only applied to the comparatively simple problem of heavy goods vehicles and motorways ?
    This was announced by Chancellor of the Exchequer Gordon Brown in the 2004 Budget, and was due to be in operation this year, but it has now been scrapped.
    See:
    “The Eddington Transport Study – no mention of privacy and security and freedom of movement issues”

    Reply

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