British Road Tax Scheme

August1991 · June 5, 2005

Plans for Britain's first pay-as-you-drive system will be unveiled this week, with motorists paying as much as £1.30 a mile for using the busiest roads at the peak of the rush hour.
Alistair Darling, the Transport Secretary, warned that drastic action was necessary to avoid Los Angeles style gridlock. "The object is not to drive people out of their cars but to ease congestion," he said last night.

....

Tom Brake, the Liberal Democrats spokesman, said: "We see it as far fairer. It taxes car usage, not car ownership."

While motorists would pay more for using the roads, fuel taxes and vehicle excise duty would be reduced. "We are not looking to pile taxes upon taxes," said Mr Darling.

"You are certainly not talking about a charge on top of another charge. You can't have both. This would be a completely different concept, a completely different way of doing things."

Daily Telegraph

This scheme is obvious, and it is evidence of public policy at its best. There will be technical glitches to overcome.

It will be interesting to see how this plays out in the political arena. I'm sure that Blair wanted to wait until after the election to announce this because it is so different.

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A similar policy in Canada would do more to help Canadian cities than any welfare scheme the federal Liberals/NDP can dream up. And the sad part is that we will have such a traffic policy eventually, it's just a question of time.

geoffrey · June 6, 2005

Plans for Britain's first pay-as-you-drive system will be unveiled this week, with motorists paying as much as £1.30 a mile for using the busiest roads at the peak of the rush hour.
Alistair Darling, the Transport Secretary, warned that drastic action was necessary to avoid Los Angeles style gridlock. "The object is not to drive people out of their cars but to ease congestion," he said last night.

....

Tom Brake, the Liberal Democrats spokesman, said: "We see it as far fairer. It taxes car usage, not car ownership."

While motorists would pay more for using the roads, fuel taxes and vehicle excise duty would be reduced. "We are not looking to pile taxes upon taxes," said Mr Darling.

"You are certainly not talking about a charge on top of another charge. You can't have both. This would be a completely different concept, a completely different way of doing things."

Daily Telegraph
This scheme is obvious, and it is evidence of public policy at its best. There will be technical glitches to overcome.

It will be interesting to see how this plays out in the political arena. I'm sure that Blair wanted to wait until after the election to announce this because it is so different.

-----

A similar policy in Canada would do more to help Canadian cities than any welfare scheme the federal Liberals/NDP can dream up. And the sad part is that we will have such a traffic policy eventually, it's just a question of time.

<{POST_SNAPBACK}>

We should all know better. There is no chance they will remove the gas taxes and all that in order to put in this congestion taxes. Just taking more and more of our money isn't the solution to any problem, let alone traffic congestion.

Technocrat · June 6, 2005

good lord... thats a great way to kill an economy. Can you imagine how screwed they would be? I can't see how this is good for a society when you essentially tax motor vehicles to the point where only the elite can afford full freedom of mobility.

Taking money out of peoples pockets does not seem like the proper solution. Providing a proper alternative to the automobile may help. But Britain has vast suburban areas, city planners are responsible for this mess and the funny thing is it should have been totally forseeable... Its time to note that cities to remain functional must built up instead of just out.

August1991 · June 30, 2006

Taking money out of peoples pockets does not seem like the proper solution. Providing a proper alternative to the automobile may help. But Britain has vast suburban areas, city planners are responsible for this mess and the funny thing is it should have been totally forseeable... Its time to note that cities to remain functional must built up instead of just out.

We take money out of people's pockets to give them food to eat - or at least, you have to pay for your groceries or a restaurant meal. Most successful solutions work because we have to pay money to get something. Why should you pay nothing to take up prime real estate on a city street with your car at 5 pm on a working day?

Think of what would happen if you could take food from stores without having to pay for it.

This change is long, long overdue and it will have profound implications for the way we think of cities, traffic and even government revenues.

Charles Anthony · July 2, 2006

Good heavens! A policy whereby only the people who use something are required to pay for it -- how could we dream ofs such a thing?!?!? On top of that, the policy reduces the charges upon people who do not use it -- but previously paid for it! This is too radical! This will lead to anarchy!

Tolls discourage joy-riding and encourage car-pooling. Hey! All of the raging socialists and reflexive freeloaders should be on board with this one, right? Not.

Quoting from the same article:

However, Friends of the Earth remained sceptical. Tony Bosworth, its transport spokesman, said. "Road pricing could play a part in tackling Britain's transport crisis, but it isn't a magic wand."

They are right: it is not a magic wand. It is efficiency and fair policy.

cybercoma · July 2, 2006

Charging people more for commuting but doing nothing to provide them with an alternative is stupid. Drop funding into making mass transit more efficient and accessible. And make city planners more responsible for the messes they cause and do nothing about cleaning.

geoffrey · July 2, 2006

Charging people more for commuting but doing nothing to provide them with an alternative is stupid. Drop funding into making mass transit more efficient and accessible. And make city planners more responsible for the messes they cause and do nothing about cleaning.

Good point cyber, you can't start "sin" taxing people when no reasonable alternative exists. In Calgary, you can't even fit another person on the C-Train sometimes in the morning, not to mention it's coverage area is so limited that it takes upwards of 3 hours for some in outlying areas to get to work. The city just tore down a pedestrian bridge for overpass work and now there isn't a practical way for me to bike the 40km from my office.

How can they tax me for their mismanagment? I'm sure lots of people would use alternatives if they existed.

I'd be ok with a congestion tax if there were reasonable alternatives, but in my city, and I'm sure many others, it's not possible to get A to B without a vehical most of the time.

Chuck U. Farlie · July 2, 2006

The city just tore down a pedestrian bridge for overpass work and now there isn't a practical way for me to bike the 40km from my office.

I agree they would have to bring in more viable alternatives at the same time... but here is an idea: move closer to your work.

cybercoma · July 2, 2006

The city just tore down a pedestrian bridge for overpass work and now there isn't a practical way for me to bike the 40km from my office.

I agree they would have to bring in more viable alternatives at the same time... but here is an idea: move closer to your work.

Not everyone can afford to live close to work. Toronto, Vancouver and other metros have insanely expensive housing and rent. Perhaps if living close enough to work, so that one doesn't need to commute as far, was important to the government, they could make mortgages and rent tax free income. I'd still rather see a viable mass transit alternative that runs more trains, buses, etc. at an affordable rate for people in major cities. I'd also like the cost of using those forms of transit to be tax free at the end of the year, since my taxes are already paying a large portion of their operating fees and the money I use towards them goes back into that system.

Start making alternative forms of commuting an enticing option (people saving time and money) and they'll be used. Until then, driving oneself to work is going to be the quickest and easiest way to go. Taxing people on the routes they use and when is only going to make people poorer if they don't have an alternate way to travel.

Imagine everyone in Toronto trying to pack onto the subway one day instead of driving. It'd be a nightmare.

Riverwind · July 2, 2006

Not everyone can afford to live close to work. Toronto, Vancouver and other metros have insanely expensive housing and rent.

This is a recent change. 10 years ago almost anyone could afford to live close to work if they were willing to give up a detached home and live in a condo. Now even condos are out of reach for many people.

they could make mortgages and rent tax free income.

Housing prices and rents are set by supply and demand - if the gov't subsidizes mortages or rents through the tax system then people can afford more. This, in turn, will cause the price of houses to rise. IOW. tax subsizes of mortgages and rents will make housing less affordable in the long run.

cybercoma · July 2, 2006

Housing prices and rents are set by supply and demand - if the gov't subsidizes mortages or rents through the tax system then people can afford more. This, in turn, will cause the price of houses to rise. IOW. tax subsizes of mortgages and rents will make housing less affordable in the long run.

That's a good point. Since housing is a necessity, I still think at least a percentage of the income that goes towards paying for a place to live should be tax free.

Charles Anthony · July 2, 2006

but doing nothing to provide them with an alternative is stupid.

Nobody should be obligated to "provide" people with transportation regardless of where they choose to work.

Riverwind · July 2, 2006

That's a good point. Since housing is a necessity, I still think at least a percentage of the income that goes towards paying for a place to live should be tax free.

Making all or part of mortgages tax free actually penalizes people who pay down their mortgages or choose to live smaller (i.e. cheaper) places than they could otherwise afford. If there are subsidies available then they should go to public transit.

geoffrey · July 3, 2006

The city just tore down a pedestrian bridge for overpass work and now there isn't a practical way for me to bike the 40km from my office.

I agree they would have to bring in more viable alternatives at the same time... but here is an idea: move closer to your work.

Everyone can't live downtown my friend, we have no room as is.

BHS · July 4, 2006

Say August, any word on if this scheme is actually working out?

Wilber · July 5, 2006

In the UK there are all kinds of good alternatives to driving. I could never figure out why anyone would want to drive on a regular basis in London. It's just so easy to get around on the tubes and busses. Lots of whistle stopper trains to all points leaving the city and a couple of express trains an hour to major centers.

theloniusfleabag · July 5, 2006

Dear BHS,

Say August, any word on if this scheme is actually working out?

It is still a ways off, and I doubt it will ever happen, at least in this incarnation, ill-conceived as it is.

From the link,

A pilot study in one of the regions, possibly an urban chunk of the West Midlands or Greater Manchester, could be operating within five or six years,

A major stumbling block...

The Government is to hold talks with motor manufacturers over the installation of the necessary technology.

Meters in the cars, I don't think the manufacturers will like the cost of that too much. They will rightly expect to recover costs plus profit, a sizeable chunk of money, and they will want it within a quarter or two, not over the long term. For R&D, testing and all that, plus installation on existing cars, each unit will be expensive, possibly prohibitive. Some may argue that if they don't ever travel the 'metered roads', why should they pay the cost of the meters?

Secondly, the collection and administration of the 'user-fee'' will be large and costly as well, likely a money-loser.

Third, will there be exemptions? One would think that delivery vehicles, taxis, etc. should be exempt, yet they plan to start charging the lorries first. Small businesses will suffer first, costs will go up immediately, and taxis will have to raise their rates commensurately.

August1991 · July 13, 2006

A new study on commuting finds the average person now spends nearly 12 full days a year getting to work and returning home.
Commuters spent an average of 63 minutes a day making that trip in 2005 - that's the equivalent of nearly 275 hours of commuting.

And the numbers are rising.

In 1992, Canadians spent 54 minutes commuting.

And nowhere was the commute longer than in the Toronto area, where it took an average of 79 minutes for a round trip, roughly 340 hours in a work year, or two solid weeks.

But the gains were particularly large for residents of Calgary and Montreal.

The round trip for people in the census metropolitan area of Montreal took 76 minutes last year, up from 62 minutes in 1992, the equivalent of 2.5 extra days a year.

In fast-growing Calgary, the round trip last year took an average of 66 minutes, 14 minutes longer than it did in 1992.

Nationally, about 25% of workers spent 90 minutes or more going from home to work and back last year - a big jump from only 17% in 1992.

CP

Doing the math, 275 hours is about 30 working days. That's about one months salary. If the average annual income is $50,000 that's about $4,000 per worker. With 12 million workers, that's about $50 billion annually. Or something less than 5% of GDP. Another way to look at it is to say that we spend about twice as much on health care as we do on the time getting to work.

The sad thing is that most of this cost is avoidable.

BHS · July 13, 2006

Doing the math, 275 hours is about 30 working days. That's about one months salary. If the average annual income is $50,000 that's about $4,000 per worker. With 12 million workers, that's about $50 billion annually. Or something less than 5% of GDP. Another way to look at it is to say that we spend about twice as much on health care as we do on the time getting to work.
The sad thing is that most of this cost is avoidable.

30 working days is 6 business weeks, or a month and a half's salary, or $6000 dollars, or $75 billion annually, or 3/4 of health care.

How, though, is most of this cost avoidable? Forcing everyone to live a block and a half from their workplace? Building factories and office blocks in the middle of subdivisions?

August1991 · July 14, 2006

30 working days is 6 business weeks, or a month and a half's salary, or $6000 dollars, or $75 billion annually, or 3/4 of health care.

You're right. I guess my back-of-the-envelope calculation was more back-of-the-hand. I was trying to be conservative.

How, though, is most of this cost avoidable? Forcing everyone to live a block and a half from their workplace? Building factories and office blocks in the middle of subdivisions?

No viable government would do what I'm going to suggest but the proposal contains the basic idea.

We pay now $30 billion annually to the federal government through the GST. So, here's the proposal. Abolish the GST and collect the $30 billion by imposing road taxes instead. In particular, impose road taxes such that drivers pay a graduated tax according to road congestion. (Free late at night, pricey on Monday at 8 am. - yes, this requires sophisticated technology.)

What does this change? We have to pay tax (GST or road tax) anyway so it's not as if we'd be paying more to the government. We'd just be paying a different tax. But no one likes taxes and the way to avoid a road tax is to avoid driving on a road when it's congested. Each car off the road is a net gain.

I'm astonished that car drivers readily accept to pay for a parking space but expect to pay nothing for road space.

Charles Anthony · July 15, 2006

I would like to expand on this proposal.

We pay now $30 billion annually to the federal government through the GST. So, here's the proposal. Abolish the GST and collect the $30 billion by imposing road taxes instead. In particular, impose road taxes such that drivers pay a graduated tax according to road congestion. (Free late at night, pricey on Monday at 8 am. - yes, this requires sophisticated technology.)

In general, if I had only those two choices, I would go for this proposal.

The way that I would expand upon it is to point out that we have more than two choices.

I have to play the devil's advocate: Why the GST / road congestion trade off?

why single out the GST?

Why not abolish (or at least reduce) income tax and replace it with the congestion tax?

theloniusfleabag · July 24, 2006

It seems August1991 has been somewhat prophetic...

I would argue that collecting tolls is cumbersome and costly. This means it is more sensible (but imperfect) to have a single road building agency which assesses a "flat toll" (road tax) to all potential users.
But technology changes. It may well become possible to install a microchip inside every vehicle. Now toll collection is no longer so cumbersome and costly. Maybe private roads will be possible again.

And in theory, it can be shown that indeed the State is not necessary to achieve perfect co-operation between all individuals in a society. But the conditions for this result are so restrictive as to make them of theoretical interest only.

from...

http://www.mapleleafweb.com/forums//index....indpost&p=33955

August1991 · July 24, 2006

I have to play the devil's advocate: Why the GST / road congestion trade off?
why single out the GST?

Why not abolish (or at least reduce) income tax and replace it with the congestion tax?

I chose the GST for the same reason Harper did. It's visible and easy to understand. But you're right, a congestion tax could replace income or property taxes.

I think the main idea though is that since we have to pay tax to the government, let's pay our tax in a way that benefits us all. If each dollar raised by congestion tax means a one dollar cut in GST, then the overall tax take would be revenue neutral. The net gain appears from the lower congestion.

It would even be political popular since more ridings are in rural areas. Rural voters would see a lower GST. Urban voters would see less road congestion.

Why doesn't the government do this? Well, London has done it and the UK is thinking of doing it. But tax policy is an absolute minefield for politicians. It's too confusing.

Nevertheless, I am reasonably confident that in 50 years or so, governments will get all their revenues from road taxes, environmental charges and royalties. In effect, we will be renting ourselves the use of the environment. IOW, income taxes and VAT won't exist.

It seems August1991 has been somewhat prophetic...

Me? Prophetic? Well, I've got (so far) a perfect record for prophecies 50 years into the future but I'm not sure if that's what you meant.

Charles Anthony · July 24, 2006

I think the main idea though is that since we have to pay tax to the government, let's pay our tax in a way that benefits us all. If each dollar raised by congestion tax means a one dollar cut in GST, then the overall tax take would be revenue neutral. The net gain appears from the lower congestion.

The mechanics of your proposal is precisely along the lines of what would be done if the road was privately owned.

It takes advantage of a market system to pricing and allocation more so than a taxation/big-government system would. All we need to do is apply the similar mechanism to more sectors of the economy and PRESTO!! I believe we can eliminate income tax entirely!

geoffrey · July 26, 2006

I think the main idea though is that since we have to pay tax to the government, let's pay our tax in a way that benefits us all. If each dollar raised by congestion tax means a one dollar cut in GST, then the overall tax take would be revenue neutral. The net gain appears from the lower congestion.
The mechanics of your proposal is precisely along the lines of what would be done if the road was privately owned.
It takes advantage of a market system to pricing and allocation more so than a taxation/big-government system would. All we need to do is apply the similar mechanism to more sectors of the economy and PRESTO!! I believe we can eliminate income tax entirely!

How are you going to pay for the police to pay the tolls on the roads to come rescue you when sanity invades your home? <_<