[sustran] Re: Vehicle Pollution and Congestion Taxes

[Todd Alexander Litman]

If you want to affect the type of vehicle purchased (such as encouraging 
smaller, fuel efficient or less polluting cars) it makes sense to impose a 
variable purchase fee that is higher for vehicles with undesirable 
features. Some jurisdictions use a "feebate," in which a special fee on 
inefficient vehicles is used to fund a rebate on the purchase of more fuel 
efficient vehicles. This is an effective way of increasing fleet fuel 
efficiency, but has been fiercely opposed by vehicle manufactures, and so 
has not been widely implemented.

An annual vehicle registration fee is an effective way to raise money from 
vehicle owners, but is not optimal because some vehicles are driven many 
more miles than others during a year, and so impose much more road, 
congestion, pollution and accident costs. It is more equitable and 
efficient to charge motorists according to how much their vehicle is 
driven, through a combination of fuel tax, a mileage-based fee (e.g., based 
on annual odometer readings), and road tolls. Fuel taxes are the easiest to 
collect, and increase with vehicle size, and so are a good way to fund 
roadway costs and transportation alternatives, such as public transit. 
However, a fuel tax cannot really be called a "congestion tax," since it is 
not related to the congestion costs a vehicle imposes.

Most driving (typically 80% or more) occurs in uncongested conditions. A 
congestion fee should only be charged when a vehicle is driven under 
urban-peak conditions. Ideally it should be variable, with a higher rate 
during the most congested conditions, and lower rates for moderately 
congested conditions. This requires some sort of road pricing, such as the 
cordon pricing used in London (a flat 5-pound fee for driving in the 
downtown area during weekdays), the electronic system used in Singapore, or 
time-variable tolls now used on Highway I-15 in San Diego, California. In 
the future it may be possible to use more comprehensive electronic systems, 
which rely on a GPS transponder or a special charging meter (called an "on 
board unit") to charge vehicles based on when and where they are driven, as 
is now being introduced for freight vehicles in Europe. However, this 
raises privacy concerns.

My own feeling is that the best pricing approach is to collect the majority 
of vehicle fees from fuel taxes, with additional special fees on the 
purchase of vehicles that have undesirable features (such as excessive size 
or high pollution rates), and for driving under congested conditions. In 
the future, as vehicles become more efficient and alternative fuels become 
more common, it will be necessary to shift to odometer-based fees. Fuel 
taxes should apply to all vehicle fuels, with lower rates for less 
polluting types and higher rates for more polluting types (such as leaded 
gasoline and diesel). In addition, it is important to have some sort of 
congestion fee that applies to driving under urban-peak conditions. In 
fact, there is virtually no other way to address urban traffic congestion, 
so whenever anybody objects to such fees they are essentially choosing 
congestion, and should promise never to complain about traffic congestion 
problems. It's worth noting that London Mayor Ken Livingstone was recently 
reelected, primarily on the basis of his implementation of a successful 
congestion pricing program. This shows that once city residents experience 
congestion pricing they consider themselves better off overall, and will 
support it politically.

There is a good justification for using a portion of vehicle fees to fund 
public transit improvements, both on equity grounds (it helps poorer 
people) and because higher quality public transit makes it easier for 
discretionary travelers (people who have the option of driving a car) to 
shift from automobile to transit for a particular trip, and therefore 
reduce traffic congestion. Even people who continue driving benefit from 
quality public transit, because a smaller congestion fee is needed to 
reduce the level of congestion and parking problems they face.

For more information on these issues see:

"Road Pricing," (http://www.vtpi.org/tdm/tdm35.htm)
"Distance-Based Fees," (http://www.vtpi.org/tdm/tdm10.htm)
"Pricing Evaluation," (http://www.vtpi.org/tdm/tdm70.htm)
"Transportation Market Reforms," (http://www.vtpi.org/tdm/tdm29.htm)

"European Transport Pricing Initiatives" (www.transport-pricing.ne) 
includes various efforts to develop more fair and efficient pricing.

Todd Litman, "Using Road Pricing Revenue: Economic Efficiency and Equity 
Considerations," Transportation Research Record 1558, Transportation 
Research Board (www.trb.org), 1996, pp. 24-28, also available at www.vtpi.org.

Todd Litman, Socially Optimal Transport Prices and Markets, VTPI 
(http://www.vtpi.org/opprice.pdf), 2000.

Todd Litman, London Congestion Pricing: Implications for Other Cities, 
Victoria Transport Policy Institute (http://www.vtpi.org/london.pdf), 2003.

Gerhard Metschies, "Fuel Prices and Taxation, with Comparative Tables for 
160 Countries," German Agency for Technical Cooperation 
(www.zietlow.com/docs/Fuel%202000.pdf), 2001.

"Sustainable Transportation: A Sourcebook for Policy-Makers in Developing 
Countries," (www.sutp.org/docs/sourcebook/sourcebook.aspx), by the 
Sustainable Urban Transport Project  Asia (www.sutp-asia.org) and Deutsche 
Gesellschaft fur Technische Zusammenarbeit (www.gtz.de), 2003. Many of 
these documents are now available in various languages including Spanish, 
French, Chinese, Indonesian, Romanian, Thai and Vietnamese 
(www.sutp.org/docs/sourcebook/translations.aspx). The Mobility Management 
module is available at the VTPI website (www.vtpi.org/gtz_module.pdf).


Best wishes,
-Todd Litman


At 12:12 PM 6/27/2004 +0530, Kisan Mehta wrote:
>Dear Colleagues,
>
>Frankly we fail to appreciate Prabha's contention that the issue is
>complex.    We have  to look to the existing situation and visualise
>conditions most likely  to come up and devise measures to ease the
>present and to avoid  future hardship to residents.
>
>Our suggestion is to charge under Pollution Tax one time levy  when a
>new car leaves the show room and recurring charge on the fuel filled
>payable at the time of filling up of the tank.  Congestion Tax is a recurring
>charge to be paid on the basis of fuel filled.      Can anybody avoid 
>registration
>for bringing car on the road with a distinctive serial number. No car can 
>run on
>roads without the serial number assigned by the registering 
>authority.   In India,
>registration tax is now one time hence the Pollution Tax as well can be one
>time. In some countries, reregistration is annual with changing serial 
>number.
>
>Both recurring Pollution and Congestion Tax can be added to fuel price and
>collectd on the basis of fuel delivered at the pump. There can be no 
>avoidance
>of this tax as the gas pump shall have to deposit the amount to the 
>treasury on
>the same lines like Sales Tax or Excise Duty prevailing in India.    Both 
>taxes
>shall have to be uniform for the entire country to seal likelihood of 
>leakage.
>
>Part of Congestion Tax collections can be used to upgrade public transport
>both intracity and intercity.   Public transport service within the commuting
>areas Indian cities is dismal, neglected by the authorities who invariably 
>collect
>Passenger Tax, sometime touching to 15-25 % of the ticket fare on every
>ticket issued for travelling in the hazardous rickety and noisy buses.
>
>The paradox is that every  bus passenger, intracity and intercity, pays the
>Passenger Tax while a car owner has nothing to pay for use of road and f
>or killing pedestrians on the road.
>
>Public transport service, both railway and bus, needs to be improved.
>Improved railway commuter service can enable ciommuters to shift to railways
>and public bus service can reduce hardship.  To improve public road service
>it is essnetial that number of private motorised vehicles has to be reduced.
>The above taxes will be a positive movement for easing road congestion
>and increasing cimmuter satisfaction.    Hope Prabha supports these levies
>as measures to ease congestion and reduce polution, both to the benefit of
>the people and more of the poor.
>
>Like any developing (poor) country. the Indian Government is doing everything
>to support motorisation at the cost of the common man who cannot dream of
>owning a car ever, even a Maruti (Suzuki) car. Best wishes.
>
>Kisan Mehta
>Save Bombay Committee
>620 Jame Jamshed Road, Dadar East,
>Mumbai 400014
>Tel: 00 91 22 2414 9688
>----- Original Message -----
>From: <mailto:prabha_k at vsnl.com>Prabha Krishnan
>To: <mailto:sustran-discuss at jca.ax.apc.org>sustran-discuss at jca.ax.apc.org 
>; <mailto:NewMobilityCafe at yahoogroups.com>NewMobilityCafe at yahoogroups.com 
>; <mailto:bombaynet at yahoogroups.com>bombaynet at yahoogroups.com
>Cc: <mailto:hjk at rincon.co.in>hjk at rincon.co.in ; 
><mailto:bombaynet at yahoogroups.com>bombaynet at yahoogroups.com
>Sent: Saturday, June 26, 2004 4:25 PM
>Subject: [sustran] Re: [bnet] France to Impose Green Tax on Big Cars
>This issue is complex. When Maruti started manufacture it was a "peoples 
>car" - implication being when we have more moolah we "graduate" to better, 
>bigger cars.
>Big cars have aspiration value. In my building the watchmen routinely 
>stand up to greet visitors in big cars - the same courtesy doesn't extend 
>to people like us in small cars.
>Taxes are easily avoidable by this class of big people in big cars. THe 
>big car manufacturers are also policy makers.
>As such, ecofreindly mass transport wil be a distant dream.
>
>From: <mailto:bombaynet at yahoogroups.com>bombaynet at yahoogroups.com
>Date: 06/26/04 13:48:01
>To: <mailto:sustran-discuss at jca.ax.apc.org>sustran discuss; 
><mailto:NewMobilityCafe at yahoogroups.com>NewMobilityCafe
>Cc: <mailto:bombaynet at yahoogroups.com>bombaynet at yahoogroups.com; 
><mailto:hjk at rincon.co.in>Harshad J. Kamdar
>Subject: [bnet] France to Impose Green Tax on Big Cars
>
>Dear Colleagues,
>
>We should welcome and applaud the French proposal to impose Green
>Tax  on Big Cars in view of increasing quantum of air exhaust in
>crowded human settlements.   This is possibly the first time that such a
>move being taken by the authorities to curb polution.
>
>   Vehicle registration taxes worked out on the laden weight of the vehicle
>to be  paid at the time of putting  the vehicle on the road are comon
>however they are  found to be inadequate to curb increasing air pollution.
>
>One time tax as proposed may not be appropriate. To achieve the object
>of ensuring minimum health, what is required in addition is a Pollution
>Tax tagged to the petrol/diesel/gas consumption. That would also curb
>the use of vehicle  after paying the first tax. The realisation of Pollution
>Tax  can be utilised to run medical care  centres for cardiovaswcular and
>related  diseases as well as curtail the use of finite resource.    Taxes
>should be applicable throughout  the designated area, say the EU, France etc
>so that no vehicle  can escapes payment of these taxes.
>
>One time tax proposed for Paris would not control the pollution because
>the vehicle owner after paying  the initial tax payable at the time of
>purchase would soon forget the payment altogether and use the costlier 
>vehicle
>more vengefully to the further loss to the community.
>
>Along with Pollution Tax, authorities should consider levying Congestion 
>Tax to
>be  paid on the basis of actual furl coinsumption.  Rates for taxes may be
>different for different fuels, say more for diesel in personal cars, to 
>encourage
>change over to less polluting fuels.   Congrstion Tax reciepts can be 
>utilised for
>improving  pedestrian movmeent facilites. In the fast growing motorisation,
>pedestrian safety and convenience get the lowest priority.
>
>Thje SUVs and 4D vehicles should be charged tae Congestion and Pollution
>Taxes at a higher rate than personal cars.
>
>Let us hope that tax in London brought by the Mayor and the tax proposed
>in France become the herbinger of improved environment and higher
>human  safety. Thanks Sujit for bringing the matter to our notice. Best
>wishes.
>
>Kisan Mehta
>Save Bombay Committee
>620 Jame Jamshed Road,
>Mumbai 400014
>Tel:  00 91 22 2414 9688
>____________________________________________________


Sincerely,
Todd Litman, Director
Victoria Transport Policy Institute
"Efficiency - Equity - Clarity"
1250 Rudlin Street
Victoria, BC, V8V 3R7, Canada
Phone & Fax: 250-360-1560
Email: litman at vtpi.org
Website: http://www.vtpi.org