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Why "road pricing" is a bad idea

Here in the U.K., our government has been making noises about “road pricing”, by which they mean a new tax based on the number of miles of road (and the types of road) that you travel using your car.

They claim that this will reduce congestion, however in order to appreciate the real effect of such a scheme you must keep in mind that:

  • Most Britons live away from where they work. This a result of industry consolidation, and of government policies such as the promotion of out-of-town shopping and industrial estates.
  • Congestion happens primarily during “peak periods”, i.e. the times at which people travel to and from work.
  • There is often little or no public transport provision to get people from residential areas to company premises. Even where there is public transport, it often takes a tortuous route, meaning that it takes much longer than travelling by car.

In other words, most of the people affected by road pricing will have little choice other than to pay the tax.

Not only that, but here in the U.K. we already have a pay-by-the-mile road taxing scheme, in the shape of one of the most extreme fuel taxing regimes of any country in the world. Not only does the government take around 50 pence per litre for unleaded petrol, but we actually pay VAT on the fuel tax!. So, of the typical 95 pence per litre we get charged for unleaded petrol today, around 14 pence is VAT, then there’s another 50 pence of fuel duty on top of that, so our government takes 64 pence of the money we pay for every litre of fuel. That’s a whopping 67.5% of the cost of petrol here.

Let’s consider for a moment what that means; say your car does 30 miles per gallon. There are 4.546 litres in an Imperial gallon (not a U.S. gallon, so please don’t try to correct me :-)), so that works out at an effective tax rate of about 10 pence per mile (more for a gas-guzzler). And all this without complicated vehicle tracking systems, extra paperwork, extra loopholes, or indeed any new laws from government.

So, if we effectively already have a by-the-mile charging scheme, why does the government think its new “road pricing” idea is the way to go? Put simply, because the public has already protested at the exorbitant taxes placed on fuel. Our government knows it would never get away with hiking the rate to the kinds of levels that it would like.

And in any case, raising fuel duty or imposing road charging schemes is unlikely to do very much to prevent congestion. Most of the people creating the congestion are simply trying to get to work, and they will continue to try to get to work under almost any conceivable tax regime. Public transport is not fit for purpose; from an employer’s perspective, it cannot deliver employees to the company’s offices reliably and on-time. From an employee’s perspective, it is dirty, unreliable, slow and often late; try to use such a service to get to many jobs in the U.K. and you would be sacked. Indeed, the situation is so bad that in Newbury, Vodafone runs its own bus services!

Increasing fuel duty or creating an expensive-to-operate road pricing scheme in the U.K. can therefore have only one result: inflationary pressure on the pound. The idea that it will have any significant effect on congestion is laughable.

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Comments

But, aren't they proposing that it replaces fuel duty and road tax? I don't believe they're doing it to raise more revenue. Also, isn't it supposed to be variable?

If implemented correctly, it should be fairer. At the moment fuel duty affects all people equally; those in the country pay the same rates as those in the city but they have to travel further. The new scheme, in theory, would allow you to charge those in the country less than those in the city.

Also, the congestion charge in London has proven (in my opinion) to reduce congestion in central London, so in some areas, raising the cost does affect congestion.

This of course assumes it's done right. In principle I think it's a great idea.

They haven’t actually decided whether it will replace fuel duty and road tax, and even if it is initially revenue neutral, there’s no guarantee that they won't change that situation in the future.

Also, you’re ignoring the equipment and administration costs of this scheme, which you don’t get with fuel duty (which, by the way, is already variable; free-flowing motorways are cheaper to travel on because cars run more efficiently at motorway speeds than they do in town centres or in traffic jams, and gas guzzlers are already penalised by fuel duty as well).

You’re right that you might be able to charge people in the countryside less (but you could do that to an extent with fuel duty, if you wanted, by reducing the duty charged on petrol from rural petrol stations), and you’re also right that the congestion charging zone in London has reduced congestion in central London. I don’t think, however, that you can reason that the same type of scheme would work nationwide; London has very good public transport compared to the rest of the U.K., and in practice most of the people who work inside the congestion charging zone don’t use their cars to get there.

I’m one of the people who would probably benefit overall financially from a road pricing scheme (assuming it was revenue neutral). But I think that overall, for the majority of road users in the U.K., it would be a bad deal. I also think it’s a very authoritarian type of taxation; we’re told (by dictat from above) which roads will be which prices, whereas with fuel duty, the amount we spend is based on the actual circumstances (e.g. whether or not it’s actually congested on the route we’re travelling) rather than on the whim of a bureaucrat in Whitehall.

I think road pricing is a good idea in purely theoretical terms. What you are pointing out are a number of practical problems with it. Why shouldn't roads be priced like any other service - internet, phone, etc. No one expects the "right" to be able to use those services for free, so why are roads any different? The problems is that it's been free historically, and that in itself has led to changes in the organization of society which are now hard (but not impossible) to undo. The reason so many people travel so far to work for example is because presently it's too cheap to do so. The costs of these journeys is not borne by the individual. It is largely borne by the environment, which in turn will be something our children and future generations will surely pay for. I daresay they'll curse us as a result. We can be forgiven for the early stages when we just didn't know the harm it causes, but not for the later stages, when we did know, but collectively decided to resist it and do nothing for selfish reasons.

The difficulties you point out are real, but there's no way they can be "fixed" before road pricing can work. Rather, road pricing needs to be introduced as a strong incentive to drive the changes needed in the other things. Why work so far from home? Because you can. If it costs you a packet to do so perhaps you'll find a more appropriately located job or house. In time, we'll all work closer to home, and villages, towns and cities will evolve accordingly. Who hen needs transport, let alone public transport. Already, for many people (especially in our line of work - keyboard bashing) there's little reason to physically go to work anyway. Getting ourselves off our collective car addiction is going to be the next biggest step forward for us as a race (and I say that as a car enthusiast, so I'm not claiming it won't hurt).

There's also an assumption on your part that road pricing means fixed pricing. I agree that would be unfair, but is that what they are really proposing? Surely using a B-road at 3am wouldn't cost the same as a major trunk route into a city at 8am?

Anyway, the point is that we have to look beyond the ends of our own noses (and pockets) and at the bigger picture. Griping about how much it is costing you to slowly wreck the planet is a bit rich.

Why shouldn't roads be priced like any other service - internet, phone, etc.

Because they’re already paid for, maintenance and all, out of general taxation, unlike Internet connections and telephone lines. This makes sense, because roads are a major piece of infrastructure and using income tax in particular to pay for them means that the cost is borne to a greater extent by those with more money, which is surely the right way to do things.

Also, your question misses the point that it is, as ever, the lowest paid who will be disproportionately hit by such a change. City bankers can already afford to drive their cars into central London, and many probably do… the congestion charge is, for them, pocket change. But it’s probably quite expensive if you’re a greengrocer with a small market stall.

The reason so many people travel so far to work for example is because presently it's too cheap to do so.

No, the reason so many people travel so far to work is because government policy has resulted in residential areas being away from peoples’ places of work, whilst at the same time failing to provide cohesive, rapid and regular public transport between residential and industrial or commercial zones. Policies that have caused this include the promotion (and creation) of industrial estates, the construction of large housing estates, often entirely devoid of business premises (other, perhaps, than the occasional small shop), and the encouragement of out-of-town shopping and supermarkets.

It isn’t because of cost at all, and as a result, if you increase the cost of getting to work, all you’ll do is push all our prices up in the shops to cover the difference.

Already, for many people (especially in our line of work - keyboard bashing) there's little reason to physically go to work anyway.

Indeed, and these days I don’t. But that’s not true for a lot of people, particularly those who don’t have jobs that are amenable to electronic communication like ours.

Nor will it be fixed overnight by road pricing, because the problem is not the cost of travel, it is the location of our places of work.

There's also an assumption on your part that road pricing means fixed pricing.

No, not at all.

My problem with the entire scheme is that it is a cynical move that will increase taxation without having a significant effect on the environment. Let’s be clear about this: nothing that we do in the the U.K. will have any impact on climate change whatsoever. It is amazingly self-important of us to think that it would, given that we are responsible for a tiny fraction of the world’s CO2 output. The only reason for cutting CO2 output here is so that our political leaders can preach the environmental message to other nations. Maybe that is a good enough reason in and of itself, though honestly I don’t see anyone really taking any notice. The U.S. will do what it pleases, and China and the other developing nations will see sermonising on this subject as hypocritical, pompous and counter to the needs of their people, and many of the other developed nations are already minded to reduce their environmental impact anyway.

Even so, the right solution to the environmental problem is as follows:

  • Civilian nuclear energy (fission now, fusion later).
  • Massively increased budget for the fusion project. Currently it gets around £2bn a year in total, which, for an international project—particularly one with the potential to supply almost limitless clean energy—is pitiful. If the international community won’t pay, we should take a leaf out of China’s book and pursue the technology independently. It might not be a bad idea to take a more thorough look at focus fusion as well, even if only to show conclusively that it does or does not work.
  • Conversion, where appropriate, to the use of electrical power rather than fossil fuels. I include industrial premises, domestic heating systems, motor vehicles, trains—in fact, everything currently powered by fossil fuels.

There is a case for off-shore wind power, tidal power and wave power in the U.K. also, but its proponents need to realise that it is not reliable enough, nor will it generate sufficient electricity, to provide “base-load” generation for our country. Most of the objections to nuclear energy (fission and fusion) are the result of scaremongering and ill-informed opinion (see the Energy Choices website, which refutes some of the sillier notions about the technology).

But road pricing? We don’t need it, and it won’t change anything anyway (other than the rate of inflation, which will just cause further interest rate hikes).

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