Road charging and political reality

Of all energy policy, anything affecting how much people pay to drive ranks among the most politically sensitive. Just ask Steven Chu, who admitted raising US petrol taxes was not politically feasible, despite his belief that such a move would reduce carbon emissions and energy dependency.

Despite this, politicians in both the UK and the US spoke have spoken this week about different approaches to raising revenue for roads and changing driving behaviours. While some innovative ideas were suggested, it also serves to underline just how what a difficult area this is. Never mind getting popular support for changing or reducing vehicle use; even getting drivers to pay for roads is difficult enough.

The BBC was this morning led with the MPs’ cross-party transport committee, which said the whole concept of environmental taxes had been “damaged” by the handling of a proposed rise in vehicle excise for the highest polluting cars.

The UK government in November changed its decision to levy an additional £90 in excise on those vehicles, instead raising the charge by £30.

“It became unclear whether it was a raise of revenue or an environmental tax and there was a feeling of unfairness because of that,” the committee’s chairman, Susan Ellman, told BBC’s Today programme.

She also said that a miles-travelled approach, or road tax, would be the fairest method of determing how much each driver contributes, but that “the amount raised could be limited by the current economic climate”.

However there were some politically feasible solutions advanced:

But she believes individual drivers might be willing to pay road charges if they could offset them against road and fuel duties or get other incentives.

She said a scheme in Oregon, in the US, which linked charges to duty rebates and the offer of insurance and entertainment services, had proved successful.

Other suggestions the committee makes are for locally-funded transport improvements and tolls for foreign-registered lorries.

Vehicle-miles or road charging sometimes come in for criticism that they would reduce incentive to use efficient vehicles, although advocates say different rates could be charged for different vehicles types. The idea been much discussed in the UK, and a landmark study for the government in 2006 recommended congestion pricing and environment prices should be part of the approach to tackling transport infrastructure problems. However transport minister Geoff Hoon in March said the country was ‘a long way’ from adopting such an approach, pointing to its complexity and the technological development required. One well-known innovative vehicle charging scheme is already in place in the UK: London’s congestion charge scheme is one of the largest in the world. However there is no shortage of driver resistance to such schemes. Congestion charging proposals for Manchester and Edinburgh were both rejected. And the UK has a streak of militancy about such issues, too – a protest by truckers in 2000 at fuel duties paralysed parts of the country for a week.

Meanwhile the House Transportation Committee in the US was yesterday looking at ways to address the forecast $125bn shortfall in its plans to spend $450bn on roads, bridges and projects. The federal gasoline tax only raises half, in real terms, of what it produced in 1993, the committee heard. Proposals to index the tax to consumer prices were opposed by the Bush administration. So what to do? Highways and Transit subcommittee Chairman Peter DeFazio of Oregon suggested a $1 to $5 tax on oil producer earnings, including the “obscene profits of ExxonMobil” and Opec members.

Another proposal was to levy a small fee on speculative transactions in crude oil futures markets, a move DeFazio said would raise an estimated $190 billion over six years.

The fee would not apply to hedgers who ultimately plan to use the fuel, he said.

We can only guess at how that would go down, given the furore over possible new rules concerning commodities speculation.

Meanwhile Republican John Mica proposed “doing away with the gasoline tax in favor of a percentage sale tax on fuel sales”.

Either way, the political outlook in the US doesn’t seem to support any of these measures:

Meanwhile, Department of Transportation Undersecretary for Policy Roy Kienitz indicated that the Obama administration was no more receptive to tax increases than its predecessor had been. “We are not supporting any new revenue from a new tax source right now,” he said.

Related links:

Why the vehicle-miles travelled is getting short changed (The Infrastructurist, 24/02/09)
Road-charging stuck in slow lane (FT, 20/03/09)

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