Tuesday, 30 April 2013

One way of incentivising a shift towards distance based congestion charging

The very name "congestion charge" (or tax or fee) turns many people off, and introducing any form of additional charge will automatically generate opposition.

So what's one way of both moving towards better pricing that isn't just about a shift from ownership fees to paying for usage, but also charging according to time and location?

David Hensher, Director of the Institute of Transport and Logistics Studies at the University of Sydney proposes one way on the website The Conversation.

He suggests not just introducing a new charge, but by lowering vehicle registration fees in exchange for paying for distance for motorists in Sydney (with a charge only at peak times for driving in Sydney).  He proposes a 50% cut in vehicle registration fees in exchange for this new charge.

He claims it would reduce peak kilometres driven by 4.7%, but more importantly by offering choice it makes road pricing far more acceptable as an alternative to the status quo.

He continues:

This road pricing reform plan would require drivers to purchase an on-board unit (approximately $50 one-off cost), that will record the kilometres by time of day. The off-peak kilometres are not charged, but peak kilometres will be charged at the agreed rate.

This scenario implies that if a unit is not installed, all kilometres will be charged as peak kilometres. So there is an incentive to install a meter (with the expectation that all motorists will do so), just like households have had with off-peak electricity meters or with water meters when they were first introduced.

Of course to charge all kilometres there would have to be a reliable way to charge them without the on-board unit, as odometer tampering would be encouraged.  An alternative would be simply to hike up the vehicle registration fee as the alternative.  

The on board units would also need to identify location, because peak driving in rural New South Wales is meaningless, so I'd suggest a broad cordon that started at the metropolitan edge of Sydney, and maybe one or two other cities like Newcastle and Wollongong.  It would be better to be more refined than that of course.   Of course if it applied across the whole state, then there would have to be an off peak charge (and there would be merits in reducing vehicle registration fees to simply administrative charges) related to infrastructure costs. 

Such an approach could attract a lot of interest, and lay a platform for a longer term shift from fuel taxation.

His suggestion got 80 comments on the website, some complimentary, others sceptical, but overall it is a good contribution to the debate about how to move towards distance based charging, by offering savings on ownership taxes in exchange for some form of peak charging.

This is, of course, only an option in jurisdictions with quite high ownership taxes, but it is promising to see that the debate is happening in Australia on this.

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