Charging Motorists to Reduce Emissions Cut Congestion and Increase Fairness

By Geoff Mawdsley, Director, Reform Scotland

In its report in October 2013, ‘Pay-as-you-drive: the road to a better future’, Reform Scotland proposed a new and better way of charging people for using roads in Scotland by replacing the existing motoring taxes (Vehicle Excise Duty and Fuel Duty), which are unfair and ineffective, with a pay-as-you-drive system of road pricing.

There are three main areas of concern with the existing system of motoring taxation. First, it has been ineffective in reducing emissions as cars remain a huge contributor to road transport carbon emissions and while other sectors have seen a reduction in emissions, transport’s contribution is increasing. Secondly, Scottish Government Indicators show little progress is being made in reducing the proportion of driver journeys delayed due to traffic congestion or increasing the proportion of journeys to work made by public or active transport. And thirdly, the current system is unfair on motorists who do low mileages and those who live in more remote parts of Scotland who pay the same level of Fuel Duty as urban drivers despite contributing little in the way of congestion or emissions and having fewer public transport alternatives.

This stems from a lack of clarity about the objectives of current motoring taxes. Changes to the rates of Vehicle Excise Duty have directly addressed carbon emissions and this should be welcomed. However, the main motoring tax, fuel duty, is a blunt and unfair instrument which takes no account of where and when people are using roads.

Reform Scotland believes that motoring charges should have three clear policy objectives: to reduce emissions; to cut congestion; and to increase fairness.

As a way of meeting these criteria, we would like to see the Scottish Government carry out a feasibility study into how a national and local pay-as-you-drive road pricing scheme in Scotland might operate. We would favour a scheme which charges motorists a variable rate for road usage depending on when and where they are driving since this is a fairer and more efficient way of allocating scarce road space. And while the Scottish Government would be ultimately responsible for the scheme and would probably price motorways and national trunk roads, we would advocate local authorities setting local road prices in their area.

There are plenty of potential benefits of road pricing, many of which have been seen in other countries which have introduced similar schemes. For a start, it would help to reduce carbon emissions from road transport since people will more readily consider using public transport, car shares, cycling or walking, as well as shopping more locally.

Further, road pricing will reduce congestion and journey times which will benefit businesses and the economy by leading to quicker and more reliable movement of people and goods.

And it will be fairer. All drivers will pay a fair price for the roads they choose to use and the times they choose to use them so they are charged appropriately for their impact on the road network and the wider environment. Infrequent drivers will pay less than frequent drivers, in contrast to VED which charges drivers the same amount irrespective of how much they drive. And people who live in more rural areas with less access to public transport, or who have to travel during unsocial hours, will pay less because they cause less congestion.

If a proportion of the revenues from the charging scheme went towards improvements in public transport, then this could be an additional benefit, particularly to those on low incomes who are more dependent on these modes of transport.

However, any such scheme should be part of a completely new approach to paying for use of our roads. As such, road charges must be a replacement for the existing methods of paying for roads through Fuel Duty and Vehicle Excise Duty and not an additional means of raising revenue.

For this reason, such a new system could not be implemented in Scotland immediately as it requires the Scottish Parliament to have far greater fiscal powers and specifically control over Vehicle Excise Duty and Fuel Duty – powers which it currently does not have.

However, road pricing is a good example of how greater fiscal powers could be used to introduce a completely different approach to a particular policy area, since they would be used to implement a new and better way of paying for the use of our roads.

The key is now to persuade the Scottish Government and other political parties of the merits of this new system. The groundwork can then be laid by explaining the benefits of such a system to the public and in working out a sensible way of putting it into practice. This would speed up implementation once the necessary fiscal powers are in place.

1 Comment

  • There are huge social benefits from people opting into road pricing such as young drivers buying insurance policies which charge them according the times, locations and speeds they drive. A voluntary approach to road pricing could be designed which allowed all drivers to opt out of fuel duty and vehicle excise duty by choosing a road pricing tariff that suited their circumstances.

    Scottish Government could implement such as system very quickly and non controversially by partnering with the insurance companies currently offering pay as you drive policies and reimbursing VED and fuel duty under terms agreed with the UK Treasury. It will take some years to find the optimal levels of the pricing policies delivering revenue to government alongside social and environmentla benefits. For more details about thisw approach read my 2007 paper “Citizens Consumers and the Acceptability of Road Pricing”.

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