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news
pollution.jpgRoad tax proposal based on distance, vehicle weight and emissions wins £250,000 Wolfson economics prize
A scheme in which road tax would operate on a sliding scale depending on emissions, mileage and vehicle weight has won a £250,000 prize.
Graduate transport planner Gergely Raccuja, 27, has won the 2017 Wolfson Economics Prize, which asked for proposals for funding better, safer roads in a fair way while benefitting the economy and the environment.
He explained that with the expected increase in uptake of electric vehicles, the Treasury’s annual £27bn income from fuel duty would need to be found from other sources.
He advocates a pay-per-mile system, with higher charges for heavier and polluting vehicles.
He said that 20 per cent of the revenue should be directly spent on road repair, solving the UK’s pot hole problem.
The charge would be collected by insurers, based on mileage and model, potentially monthly using telematics or as an annual charge.
Lord Simon Wolfson, said it was a “groundbreaking, yet simple” solution.
Raccuja told the Guardian: “The key to our entry was to keep things simple, yet come up with an answer that was sophisticated enough to deal with an upheaval in cars and road transport which hasn’t been seen since the introduction of the motor car well over a century ago. I hope I can persuade our politicians too that everything to do with our roads could be better.”
Steve Gooding, the director of the RAC Foundation, which provided input to Raccuja’s final submission, said the clock was ticking for policymakers as existing models of tax and spending on roads faced becoming redundant: “The common themes of several entries have been both the pressing need for change and the belief there is a better option to balance what drivers contribute to the finances of the country and what they get in return.”
Simon Wolfson, said it was a “groundbreaking, yet simple” solution. Raccuja beat competition including a proposal for tradeable road miles from the economist Deirdre King and her husband Edmund, head of the AA motoring organisation. Other shortlisted entries suggested rewarding people for changing their driving habits to beat congestion, and using different technologies to impose variable charges for journeys.
Raccuja said: “The key to our entry was to keep things simple, yet come up with an answer that was sophisticated enough to deal with an upheaval in cars and road transport which hasn’t been seen since the introduction of the motor car well over a century ago. I hope I can persuade our politicians too that everything to do with our roads could be better.”
Steve Gooding, the director of the RAC Foundation, which provided input to Raccuja’s final submission, said the clock was ticking for policymakers as existing models of tax and spending on roads faced becoming redundant: “The common themes of several entries have been both the pressing need for change and the belief there is a better option to balance what drivers contribute to the finances of the country and what they get in return.”
Earlier this month we reported how a £5bn cycling infrastructure fund was proposed by the president of the AA, Edmund King, and his wife Deirdre, who is a former economist at the British Road Federation, as an alternative entry for the prize.
Sponsored by Lord Simon Wolfson, CEO of Next plc, and run in partnership with the Policy Exchange think tank, the prize has previously run in 2012 and 2014.
In 2012 it invited proposals on how the Eurozone could be safely dismantled, while the 2014 prize asked the question “How would you deliver a new Garden City which is visionary, economically viable, and popular?”
The question asked this time around was: "How can we pay for better, safer, more reliable roads in a way that is fair to road users and good for the economy and the environment?”
Speaking about their submission, Edmund King said: “I think the biggest problem with the road network is congestion, environmental issues, and also the way we pay for it. We need a new, radical system to pay for roads, but also to improve our roads.”
The proposal is built around the concept of Road Miles. “We set up a system where every driver in the UK gets at least 3,000 road miles free – so it’s free access to the road network – but then after that, there is then a small charge.”
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26 comments
Let's take a guess -- there are ~30 million cars on the road. If we assume an average of £120 duty per year and an average of 10,000 miles at 50mpg... fuel duty is £2.63/gallon which means ~£650 per car per year in direct tax, or ~£20bn/year. This ignores lorries, buses, VAT, and vehicle purchase tax, but gives us a ballpark figure for comparison.
Total spending on roads is a hard number to get hold of easily, as it's split between various government agencies and local government, but it appears to be around £10bn per year.
So it's true that the government extracts more in direct taxes from motorists than it spend on road infrastructure. However this completely ignores the externalities of 50 years of preferring private motor cars as a transport solution -- the additional costs imposed on society through health impacts, lost time, climate change, societal changes, etc. -- which may be substantial but are much harder to enumerate.
But none of the tax collected is hypothecated: there is no link between taxes raised and maintenance done. The most dangerous part of the winning proposal is restoring this link, which could turn into a 'pay to play' system or reinforce the sense of ownership drivers have of the roads as 'their' space, rather than as common space.
The amount of tax taken from car owners already far exceeds what the governemnt spends on roads, so this proposal won't change anything since the Government will still take and stick it in the general pot and naturally spend as little as possible on roads.
Tax has to come from somewhere and far better to base on pollution rather than employment.
Is that true? I'd be interested in seeing the figures for that as I thought cars were subsidised by everyon else. (I'm not saying that I don't believe you, but I just found it surprising)
Surely one group subsidising another is moot.
I, and many other childless people, subsidise the education system.
Pacifists subsidise our armies.
Healthy people subsidise those that choose to eat crap, smoke tabs and drink ale.
Etc.
There are so many problems to this proposal.
1. Everyone needs to be on the same system. If it is based on tracking where vehicles are being driven and when, then you either need a massive co-coordinated anpr network or all vehicles need to be retrofitted with trackers plus the IT infrastructure to support.
2. Privacy and personal freedom issues. No-one is going to be happy about being compelled to allow the government to track their vehicle movements. Not a vote winner.
3. There is still no real incentive not to make that nuisance 1/2 mile round trip to drop the kids at school during peek travel time. Even if you charge those roads at $1 a mile, the cost is negligible for the locals, prohibitive for the longer distance commuter.
In many ways the current system of a fixed cost element based on vehicle value and some kind of damage to the environment rating (VED), taxes on fuels which by definition are paid by those who use more, and local congestion charges at peek times is not actually that bad.
Maybe what could work, and piggybacking to the telematics option offered by the insurance industry would be say a $500 flat increase in all VED rates, with a $5 per week day rebate for any day where the car is not driven. No compulsion, but a significant carrot to sign up for telematics which has many other benefits.
I spent all of 5 min thinking about this. I like the idea of linking insurance into something you had to purchase in order to use the vehicle, so slapping it on as a fuel extra is neat. But I wondered if you could have a smart numberplate with a black box device and GPS receiver that you have to hire in order to be on the road. Its costs would include 3rd party insurance charges as well as road charging depending on emissions level of vehicle.
It could collect automatic congestion charges, log speeding offences and vehicle location, such that after an incident the driver could be found. Driving without one automatic prison scentence. Cameras could be used on flyovers and city roads to catch vehicles operation without licence. It could be used to push cars to where they make sense, out of cities for example by altering the charge rate.
That could clean up our cities plus make them nicer places to live. Yes it has a cost, but then so does vehicle usage.
Probably a flawed idea.
Such an integrated solution would really tax everything as the policy makers wanted to. It is not really that hard to be implemented neither in technical nor in total cost level. The key point is whether the government really wants it and that it seems a little Orwellian in terms of peivacy.
Ground breaking? Sounds the same as New Zealand's hypothecated "Road User Charge" for diesel vehicles (petrol vehicles pay 66 cents per litre hypothecated excise tax on fuel at the pump).
Diesels pay per kilometre depending on weight (costs of vehicles determined from the "Road User costs and charges report to Parliament 2004). Electric vehicles are currently exempt but will be included in RUC at a future date.
Usual urban biased cobblers.
How about taxing the HGV's off the road instead? So what if every whinging git wants their bits tomorrow rather than next week. Its this instant scoiety thats helping to pollute our roads.
Spend the money on trains not roads, make trains attractive and roads a hassle to use.
This is a really bad idea as it will result in speedo tampering and miles being wound back.
There is no such thing as 'Road Tax' ... its vehicle excise duty.
Initially that wound me up too, but 'road tax' is a general term and I suppose this idea relates to the general idea of taxing road use rather than the specific VED.
How about factoring in car dimensions to bring an end to this pathetic craving for ever larger SUVs?! Many normal roads are becoming almost gridlocked as these, and in fact all, vehicles get wider and wider. Every new model that is released is xx cm wider than the previous generation yet still only accomodates the same number of humans and luggage. And to find them sitting in rush hour queues with a single adult in them adds insult to injury. Proper congestion charging would actually prohibit these vehicles from town centres or make it prohibitively expensive.
And while I'm at it, why doesnt congestion charges get ever higher the more frequently you travel. All schemes we have today reward regular journeys by providing bulk buy discounts!! I guess that's what happens when politicians determine this sort of stuff.
Agree - another thing that is required in our congested cities. A similar piece of tax legislation in Japan resulted in the Kei cars that are common over there.
Thats right: I remember seeing about that on a documentary by whatsisname, the one that isn't Hammond or Clarkson.
Cool, another reason not to register your vehicle or have insurance. Plus a whole new commercial opportunity to provide telematics box "correction" services.
How does road fuel duty not already do this?
Ditch VED and 3rd party insurance and stick them both on fuel.
Pretty much 0% avoidance of road fuel duty.
Quick google shows £2bn a year cost from uninsured drivers and nearly £1bn for unpaid VED.
Plus would show the real cost of driving.
Absolutely. Fuel duty suffered increases with the number of miles you do and how inefficient your car is. I suppose the guy has a point in 30 years time if everyone has switched to electric cars but we're a long way from that now. Could always wack up VAT on electricity at that point (assuming we don't all have solar cells charging cars overnight).
Maybe more sophisticated and widespread congestion charges in cities on top of fuel duty could try and nudge people who don't do many miles but do "bad" miles .
Anything to scrap fixed costs (insurance & VED) and move them into per mile costs is helpful as it makes public transport costs more comparable. You can't blame people if they've taken the depreciation, VED and insurance hit and the marginal cost of driving somewhere is then pretty cheap compared to the bus.
Main thing in the short term must be for the current government to stop bribing voters and actually start raising fuel duty again so the real cost of motoring doesn't keep falling.
As for hypothecating taxes, stupid stupid idea.
This. I need to get to a mate's house about thirty miles away - with a suitcase, so I can't ride. I thought to myself, "easy, I'll get the train". A return ticket costs £37.20, so I'll be driving, for a marginal cost of around a fiver.
I had the same idea but I think the article is suggesting fuel duty will disappear as electric vehicles replace the ICE. They need to make up the revenue from fuel duty with a different tax.
Recent news items reckon electric cars will outsell ICE cars within 5-10 years, with consequent loss of fuel duty income, and governments are waking up to this and beginning to panic.
I agree with others about the Orwellian implications of having a (of necessity, not anonymised) vehicle tracker installed, and presumably registering a bank card or account for instant payment of fees (I can't see them sending out monthly road use bills).
[/quote]
Recent news items reckon electric cars will outsell ICE cars within 5-10 years, with consequent loss of fuel duty income, and governments are waking up to this and beginning to panic.
[/quote]
Would this not just lead to the re-basing of costs allocated to electricity generation (subsidised renewable energy, coal, gas and waste to energy plants, and nuclear; which doesn't seem to be factored in at the moment?).
The truth of it is that our Government needs revenues. At the end of 2012 there were 34.5m vehicles registered for use on our roads, 83% of whcih are cars. At present it taxes vehicle use (VED); fuel; vehicles (VAT); and insurance (IPT). It also charges for congestion in some areas and emissions (for certain zones and through VED). This is a massive source of revenues and if they start to dry up they will need to seek other forms of rent.
As an aside, I suspect the time to buy an electric car is now if you can manage the logistics, before the costs catch up and queues for chargers start...
How would you spread the insurance risk?
How would you prevent the new surge un theft of fuel?
Surely we have the technology to identify reg plates and find those who neither pay for insurance or VED. But hey! We voted austerity back in in June, so we can't complain.
Taxing fuel is unworkable, it will perpetuate the "we're paying for the road" myth too.
I'm a big fan of taxing vehicle weight to pay for road upkeep. At the moment, big lorries are subsidised by the rest of us as they have by far the largest affect on the condition of roads and we all have to pay for the upkeep.
The winning proposal is none of those things. There's nothing ground-breaking about it at all in terms of the inputs that determine the amount of tax paid. The only way to solve congestion is to reduce the number of vehicles on a given stretch of road at a given time. This model does nothing to more evenly distribute demand; there needs to be a premium paid to drive on the most congested roads at peak times and a discount to drive on quieter roads off-peak.
No, no, no. Why would you want to redistribute it, making quieter roads worse? Reduce the overall demand and make all the roads better.