Friday 14 March 2014

Road pricing discussed in Vancouver - for revenue or for demand management?

Vancouver's problem is financial.  It wants more money, but it is also considering how best to sustainably improve the future of its transport networks.

Simon Fraser University's Moving in Metro page has a good collection of articles and presentations about the debate in Vancouver.

However, it appears the debate is moving towards proposals for a referendum on how to pay for public transport.  An option that appears to have a range of options, excluding one - that users might be asked to pay.

The Globe and Mail reports that there is now debate about whether to include road pricing and bridge tolls (a blunt option) to raise revenue for public transport.   The Provincial Government is apparently opposed to inclusion of "regional tolls" and "road pricing".

The report gives a good summary of the key issue:

The exchange is just the latest in what has been a five-year tussle between Lower Mainland mayors and the province in trying to figure out a way to pay for major transit improvements.

The two big projects on the horizon are a $3-billion subway line in Vancouver, from Commercial Drive to the University of B.C., and a $2-billion light-rail system in Surrey that would connect its city centre with three other important nodes.

Right now, TransLink, the regional agency that oversees transit, along with some roads and bridges in the region, pays for everything mainly through fares, property taxes and gas taxes.

That doesn’t provide the money to take on any more big construction projects, since the agency is already making payments for its hefty share of the recently built Canada Line and the Evergreen Line, currently under construction....

But the province has blown hot and cold on various suggestions, including tolls, road pricing, a vehicle levy, a regional sales tax and carbon-tax revenue.

The big mistake that could be made is that a solution is developed based on raising revenue rather than the impact on transport use and economic benefits.

It is clear that there could be reforms of taxation and funding of transport in Vancouver and the Province as a whole, and that there will be new pressures as Washington State progresses towards supplementing or replacing fuel taxation with road user charging based on distance.

However, the debate hasn't really gone far enough into focusing on how to treat road pricing.

There really are three key purposes that are not mutually exclusive, but need to be considered discretely:

1.  Raising additional revenue:  Honest policy advice would say that any complex way of taxing people should be avoided.  If it is just about raising money to spend on those who will not or are not seen as being able (or should not have) to pay for something (e.g. subsidised public transport), then taxes on property or generic taxes on owning vehicles, or on fuel are in themselves, easier to consider.  In short, if the demand impacts are unimportant, then tax whatever is seen to be most equitable.  However, efficient road pricing will deliver this, but if driven just by revenue, then the costs of implementing this don't add up.

2. Demand management and more efficient network use:  This is obviously where congestion charging and road pricing generally comes into its own.  This would mean pricing being implemented on the most congested routes and areas, with the purpose of improving traffic flow.  Property taxes and fuel taxes fail to deliver this, but to do this involves high capital cost.   It will deliver revenue as a secondary point, but design should be focused on reducing congestion.  Of course, what you do with the revenue is important, and given the controversial nature of urban road pricing, at least part of that revenue ought to be spent on the roads or recycled through other lower taxes.  It is, after all, far better targeted than a tax.

3. Reform of charges/taxes for motorists:  This is a more fundamental reform of all taxes and charges imposed on motorists, and is closer to a model whereby road pricing replaces all or most of them.  The focus on doing this would be to introduce more efficiently targeted pricing, so would include demand management and would generate revenue, but as other taxes would be scrapped or reduced, it would mean many would simply pay differently, by paying for road use rather than proxy taxes.  This is no doubt, going to be further than most politicians want.

In my view, the key question has to be - Does Vancouver want to start managing congestion through pricing, and get some revenue, or is it solely focused on how to raise more revenue?

You see if it wants more revenue, and doesn't care so much about congestion, it could introduce a city wide "vignette" system, whereby anyone who wants to drive to the city (or if it really wants more money, within it) during set hours, pays for a flat rate pass allowing it to do so.  If all that matters is generated enforceable revenue, then keep it simple.

However, if it also wants to get more efficient highway use, then it needs to be more clever.  That means designing a system that targets congestion, and that will take time to develop, model, refine and get public approval for.  That assumes there is public support for raising revenue for the projects that politicians want to fund.  The reticence in raising other taxes for them must at least raise the question as to whether it is valid.

Other articles in the past year

In the Surrey Reader, Eric Doherty, transportation planner, is reported as advocating a "cross border toll" primarily to capture British Columbian drivers who drive to the United States to buy cheap fuel, avoiding the higher taxation in British Columbia (it would also charge Americans for using Canadian roads).   The article continues to debate a range of options, from small bridge tolls to tolls on newly rebuilt bridges to network wide charges or cordon charges.

Pete McMartin in the Vancouver Sun says describes how the Stockholm referendum was a referendum in the city itself, not the wider metropolitan area.   53% of Stockholm residents voted for it, but if the views of all those across the county were counted it would have been 60% against.  His view is that it is more difficult to get support for urban road pricing than some may think.

Douglas Adams in the Vancouver Sun supports small bridge tolls as a moderate solution that isn't punitive.

Letters to the editor of the Vancouver Sun are already debating it, but most are sceptical, with one raising the common view that fuel tax is already a form of road pricing.  It is, but it is just not a very good one in terms of its distributional or allocative impacts.

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